DThe federal government’s financial aid for private households and companies has more than doubled compared to the previous year. The Kiel Institute for the World Economy (IfW) has calculated in its new subsidy report that they are likely to reach around 208 billion euros this year. In 2022 it was 98 billion euros, in 2021 it was 77 billion euros.
“This enormous scale goes beyond what was previously known,” said Claus-Friedrich Laaser, subsidy expert at the IfW. The main reason for the increase is the energy crisis resulting from the Russian attack on Ukraine. Since the beginning of the year, the federal government has been subsidizing consumer spending with price caps for gas, district heating and electricity.
The Kiel economists write that federal financial aid is now the federal government’s most important expenditure item. This year, more than 30 cents of every euro went into financial aid. Social spending – primarily the federal subsidy for pension insurance and spending on citizens’ money – would be almost 30 cents lower. Just under 20 cents of every federal euro went to areas such as infrastructure expansion or research and education. In the area of subsidies, spending has recently clearly shifted towards the environment and energy.
Half of the aid comes from special funds
Around half of the financial aid this year will not be financed from the regular federal budget, but from the economic stabilization fund, a so-called special fund. The federal government filled the fund last year with credit authorizations of 200 billion euros and used it to pay for the state’s stake in the gas importer Uniper.
The IfW estimates the subsidy volume of the economic stabilization fund at 100 billion euros. The government’s planned values for 2023 of 40 and 43 billion euros are set in the report for the gas and electricity price brakes. According to the Federal Ministry of Finance, only just under 19 billion euros had actually been paid out for the gas price brake and 13.6 billion euros for the electricity price brake by the end of August. The reason is that market prices have fallen again.
The traffic light coalition wants to continue the price brakes until April 2024. According to Economics Minister Robert Habeck (Greens), discussions are still ongoing with the EU Commission. At the same time, the traffic light coalition is currently fighting for a new subsidy: a reduced electricity price for large industrial companies for several years. The Greens and large parts of the SPD are in favor, the Chancellery and the FDP are against it.
Including the estimated values for financial aid from the states, the IfW calculates that the subsidies amount to 362 billion euros or 9.7 percent of the gross domestic product. In 2019, before the Corona aid period, the proportion was 5.8 percent.
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