Germany’s ‘dangerous’ €200bn energy bailout slammed by EU allies

gGermany’s ‘dangerous’ €200bn energy bailout has sparked fresh rows within the EU, with Spain and Belgium the latest member states to voice their apprehensions.

The “protective umbrella” unveiled by Berlin, similar to that proposed by the British government, aims to partially shield homes and businesses from soaring gas prices.

But it has sparked complaints from other EU countries, who say it could distort energy markets on the continent and shatter the bloc’s united stance this winter.

Europe has long relied on Russian oil and gas supplies, but after the invasion of Ukraine the Kremlin throttled flows in the face of heavy criticism from Brussels.

Amid tight gas supplies and soaring prices, Berlin’s massive national energy bailout has raised fears in other capitals that member states will each have to fend for themselves as temperatures cool .

Alexander De Croo, Belgian Prime Minister, warned on Wednesday that large “imbalances in budgetary spending” between member states are “dangerous”.

He said it risked ‘degrading Europe’s single market because everyone is just doing their own thing’, according to the FinancialTimes.

In a separate interview, Spanish Prime Minister Pedro Sánchez also said the single market must not be allowed to “break apart”.

These comments are a new headache for Olaf Scholz, the German chancellor, as he seeks to cooperate with other EU states in the response to the winter energy crisis.

Hungarian Prime Minister Viktor Orbán has already likened Berlin’s plan to ‘cannibalism’, while outgoing Italian Prime Minister Mario Draghi has warned he risks splitting the bloc ‘according to space in our national budgets’ .

It came as European Commission President Ursula von der Leyen said the EU should consider a temporary cap on petrol prices to try to reduce soaring household bills.

The bloc should also explore a specific new cap on the price of gas used to generate electricity, she added.

The main TTF price benchmark for pricing in Europe is heavily dependent on pipeline supplies which have been constrained by Russian pipeline supply cuts.

The EU receives increasing amounts of gas in shipments from around the world. Any cap would be temporary while the EU develops a new benchmark more representative of current prices, Reuters reported.

Prices in the UK tend to follow the TTF as the markets are linked. It was not immediately clear how a European cap would affect the UK market.

European leaders will discuss the measure on Friday. In a speech on Wednesday, Ms Von der Leyen also said there was a need to “test” Europe’s infrastructure after the sabotage and shutdown of Nord Stream pipelines from Germany to Russia.

About Kristina McManus

Check Also

Non-majors follow suit with rate hikes

Non-major banks are fully passing on the latest rate hike from the Reserve Bank of …