Enlarge image
Workers at a gas pipeline (archive image): can Germany get by without Russian gas?
Photo: Frank Augstein/ AP
Ever since Russia invaded Ukraine, German economists have been arguing about the impact of a Russian gas supply freeze on the German economy.
According to a new study, an embargo would have dramatic consequences for the economy.
An abrupt stop to the supply of Russian natural gas would cause German gross domestic product to collapse by between three and eight percent in the first twelve months, calculates Tom Krebs, a professor of economics in Mannheim, in a study funded by the institute for macroeconomics and economic research, which is close to the union.
In addition, an energy price shock should lead to a collapse in demand for goods because consumers are unsettled, according to the economist.
That could reduce economic output by a further two to four percent.
In the event of a gas embargo from the European or Russian side, an economic slump on the level of the corona year 2020 or the financial crisis in 2009 would be expected, writes the professor of economics.
But there is also the possibility of an economic crisis "the likes of which West Germany has not experienced since the Second World War," warns Krebs, who is also an expert in the German Bundestag.
The consequences of an energy supply stop for the German economy have been the subject of heated debate among experts for months: some researchers consider the consequences to be manageable.
In a study written with colleagues, the economist Rüdiger Bachmann, who teaches in the USA, expects a maximum slump of three percent.
The Science Academy Leopoldina had also described the consequences of a delivery stop as "manageable".
The union-affiliated IMK Institute, on the other hand, had predicted an economic slump of up to six percent.
The economic researchers are at odds above all about the so-called cascade or second-round effects.
They arise when key industries have to shut down or stop production across the board and other industries then lack key primary products.
According to the economist Krebs, it would be difficult to dampen these effects.
According to the study, natural gas is used in German industry, for example in the chemical, food and mechanical engineering and vehicle construction industries, and it can hardly be replaced there.
According to the study, there is a risk of more company bankruptcies or production relocations and a “significant increase in unemployment” if there is a gas stop.
Economic and monetary policy can hardly take countermeasures.
In view of the expenditure to cushion the corona crisis and the high inflation, its options are limited.
The price shocks for energy and food also “predominantly hit lower and middle incomes, so that social tensions are exacerbated.”
microphone
