Energy costs push Germany to ‘beg with hat in hand’ – Russian tycoon

Berlin’s current economic policies are unlikely ‘to lead to anything good,’ Russian businessman Oleg Deripaska says

Germany’s latest fiscal policy decisions, coupled with persistently high energy costs, are likely to worsen the economic crisis in the country, Russian businessman Oleg Deripaska wrote on Telegram on Friday.

According to the billionaire, Berlin’s efforts to deal with economic problems are inefficient.

The jump in power and gas costs for German businesses and ordinary Germans are pushing the once-thriving major European economy to beg with its hat in hand,” he said, adding that the “deficits, subsidies or the issuance of debt securities will definitely not lead to anything good.

His comments come in response to news about Berlin’s plan to suspend the “debt brake” mechanism, a constitutional limit on net new borrowing, for a fourth consecutive year. The emergency action is aimed to help the government account for some €37 billion ($40.3 billion) of new off-budget debt incurred due to measures taken to ease the burden of high power and gas prices on households and companies. It is expected to be included in a revised 2023 budget next week.

Last year, Germany and the broader EU faced an energy crisis, largely caused by the loss of Russian gas imports due to Ukraine-related sanctions against Moscow. While Berlin has so far managed to substitute some of the gas it used to buy from Russia with alternative energy sources, experts note that the heating season may still prove trying and energy prices could spike again.

READ MORE: Germany may tax super-rich to battle crisis – media

High energy costs have been weakening Germany’s economy, pushing up inflation, which prompted the government to hike interest rates, causing challenges in the manufacturing sector. The country slipped into a technical recession in the first quarter of the year, and showed little recovery in the following two quarters.

Deripaska has previously criticized EU sanctions against Russia, likening them to an economic “wonder-weapon” that is ineffective, outdated, and could be harmful to the countries that use it and the global economy as a whole.

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