Large-scale aid promised by Olaf Scholz to German businesses and households is going according to plan: an energy price shield to fight inflation will come into effect at the beginning of 2023, despite criticism from Europeans, writes AFP.

“It is important for all of us to find ways to make it easier for citizens (…) small and large companies so that we can survive this period together,” the German Chancellor emphasized after consultations with regional leaders.

The cap on gas and electricity prices is designed “so that citizens are not afraid of their bills”, given that inflation in the country exceeds 10%.

The measure is a key part of a 200 billion euro rescue package unveiled in September that has angered several of Germany’s European partners, who have been criticized for acting alone.

Berlin, for its part, insists that these measures are proportionate to other aid plans adopted in Europe, especially in France.

The price of gas has been frozen since January 1

According to the road map presented on Wednesday, gas prices will be frozen from “January 1” for about 25,000 large companies, almost 2,000 hospitals and all schools, then from “March 1” for households and small and medium-sized enterprises. They are also “considering” the payment of February bills in retrospect.

The government will subsidize 80% of household consumption. Above this volume, the population will pay the market price for gas.

The limit will last until April 2024.

As for electricity, the capping mechanism will come into effect on “January 1” at the level of “40 cents per kilowatt-hour” for households and 13 cents for large companies.

Germany, Europe’s largest economy, has been hit hard by rising energy prices that have hit the continent since the war in Ukraine. Germany was heavily dependent on Russian gas supplies, which were sharply cut.

Industry, the engine of the German economy, has been begging for help for months, saying thousands of companies are at risk in a country headed for recession.

Some companies say they have doubts about their future in the country, such as chemical leader BASF, which wants to “permanently” cut its European capacity, including at its flagship plant in Ludwigshafen (west).

Steel producer Arcelor Mittal has partially closed its plant in Hamburg and reduced working hours for most of its employees in the country.