Germany to extend energy subsidies to smaller firms amid closure fears

theguardian.com:

Germany plans to extend a scheme subsidising energy costs for big businesses that are heavily dependent on energy to all small and medium-sized businesses, as part of a package of measures designed to avoid a wave of insolvencies.

Robert Habeck, the economy minister, said he anticipated that the subsidies would be in place for a limited time, until efforts on the national and European level to bring down high electricity and gas prices took effect.

He said the government would be at pains to “change the design of the electricity market so that cheaper costs can be transferred to consumers”. The aim, he said, was to split the price of electricity from the price of gas. Both have risen markedly since Russia invaded Ukraine and supplies of Russian gas to Germany plummeted, stopping altogether a week ago.

From October the government plans to financially compensate companies that lower their gas consumption. In some cases, companies are expected to temporarily stop production.

Lobby groups have said increasing numbers of businesses are facing existential crises. On Thursday, bakers protested against soaring energy bills that many said threatened them with closure.

Two leading economic institutes raised fears of a recession in Europe’s largest economy, lowering their forecasts for 2023 to a shrinkage of between 0.7% and 1.4%, after growth expectations announced in June of between 2% and 3.3%. Only one, RWI Essen, predicted growth, of about 0.8%.

Habeck told the Bundestag there was a need to address the “demand shock” that would affect consumers and businesses, as many people were already reducing their spending to protect themselves against inflation.

“We will embrace measures to ensure that the people in Germany will have enough