Wirtschaftsweiser warns of Russian gas supply stop: "It's about the core of German industry"

Created: 03/31/2022Updated: 03/31/2022 08:48

By: Hannes Koch

Economy Achim Truger warns of a deep recession in Germany if Russian gas supplies fail.

© Stefan Boness/Imago

If gas supplies from Russia were to stop, this would have a major economic impact in Germany.

Business expert Achim Truger therefore warns of a deep recession.

Munich - Achim Truger is a member of the Advisory Council for Economics, which advises the federal government - the so-called economic experts.

If gas supplies from Russia fail because Moscow or Berlin cut the lines, German economic output will shrink by more than 2 percent a year and inflation will rise by up to 9 percent, says Truger.

We followed up with him.

Mr. Truger, is it responsible to cut off energy supplies from Russia in response to the war?

You are a government advisor – please don't say that politicians have to decide that.

Yes, that's exactly what I'm saying.

Accountability is the domain of democratically elected MPs.

They have to make these complex considerations.

As an economist, I can help assess the economic impact.

Perhaps Russia will stop supplying itself because the West doesn't want to pay in rubles.

But would an energy embargo by the German or European side be economically responsible?

I don't want to use terms like "responsible" or "manageable".

I can tell you: An immediate halt to the supply of energy from Russia would lead to a recession in Germany.

This would hit the country in a situation where it has not yet recovered from Corona.

The contraction would throw us back economically to around 2020.

And now it's not about the personal services and gastronomy, but about the core of German industry.

That would be very serious.

Energy embargo would cause “strong economic damage in this country”.

"Back to 2020" doesn't sound that dramatic.

The energy embargo as a sanction against Russia would cause severe economic damage in this country.

Based on a current study, one would have to reckon with several 100,000 additional unemployed.

Many industrial companies would have to reduce or shut down their production, which devalues ​​investments and requires new ones, such as the short-term switch from natural gas to oil.

In April 2020, six million employees were on short-time work due to Corona.

The Federal Employment Agency paid for it. Can't the state also cushion the possible new economic crisis?

That would be the hope.

But now it's about more.

Not just a short-term bridging like with Corona.

The structures of industrial production are now up for discussion.

The far-reaching structural change from fossil to renewable energy must now come much faster.

Economics is the least concerned about “higher government debt”.

Isn't the point actually whether the state will take out a few hundred billion euros in new loans to compensate companies and private households for the defaults?

First, many companies are under pressure to change their production processes.

Secondly, this will devour large sums of money, including from the state.

The least concern I have is about the resulting higher national debt.

Is it realistic that the federal government will comply with the debt brake next year?

I consider that unlikely.

The costs for economic aid and energy security are rising, the economy is doing worse.

In 2023, the government will use up its reserves heavily.

Committing to returning to the debt rule carries major credibility risks.