Scholz Promises Germans More Aid to Cushion Inflation Blow

·2 min read

(Bloomberg) -- Chancellor Olaf Scholz vowed to provide Germans with more financial support to ease the burden from the rising cost of living.

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Scholz’s administration has passed two packages to cushion the impact of higher prices, and more measures will need to follow, he told lawmakers on Wednesday.

“We have to see what we can do to protect citizens from dramatic price increases,” he said in Berlin.

After an initial gathering on Monday, the German leader said he will meet with representatives from employers, unions and the Bundesbank again in September. The rare joint effort is to channel the process and avoid conflicting proposals, Scholz said on Wednesday.

The chancellor underscored the growing concern about inflation by taking to Twitter to call on companies to keep a lid on prices and not take advantage of the situation to pad profits.

Germany’s current support policies -- worth more than 30 billion euros ($30.6 billion) -- include waiving a surcharge on electricity, steeply discounting public-transport tickets and providing one-off payments of 100 euros per child and 300 euros for each income-tax payer.

Scholz has compared the ongoing surge in prices to the inflation crisis of the 1960s and 70s. The situation risks intensifying as Russia’s squeeze on gas supplies threatens to rip through German industry and drag Europe’s largest economy to the brink of recession.

To address the mounting crisis, Scholz’s cabinet on Tuesday rushed through legislation that would allow the government to rescue energy companies struggling to cover deliveries as prices surge. The enhanced powers -- expected to be passed by parliament this week -- enables the state to offer bailout packages, including acquiring stakes and extending emergency loans.

(Updates with Scholz post on Twitter)

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