Gas embargo against Russia?
Heil warns of "Stagflation" - "Horror for all politicians"
Created: 05/13/2022, 15:16
By: Linus Prien
Federal Minister of Labor Hubertus Heil has warned of a double crisis if gas supplies are stopped from Russia.
He also spoke out in favor of relieving the economically weak.
Berlin – Federal Minister of Labor Hubertus Heil (SPD) has warned of economic stagnation with rising prices in the event of a gas supply stop from Russia.
He also held out the prospect of additional relief for citizens if inflation remained high.
"It is clear that if we keep a very high price level in the long term, we will find new answers," Heil told the
Rheinische Post
.
The traffic light coalition quickly decided on a relief package worth 30 billion euros to provide targeted help to citizens and cushion social hardship.
"If, for example, the price increases last in the long term, we have to organize permanent relief," said the minister.
Inflation in Germany: Heil would like to support people with “normal and low incomes”.
Specifically, Heil pleaded for “socially graded climate money” to compensate for rising CO₂ prices.
He was rather reluctant to lower VAT on food.
"In everything we do, we also have to ensure that relief actually reaches those who need it."
Heil underlined that the state could not compensate for all losses caused by increased inflation.
Although the state can now cushion particular hardships, it cannot completely compensate for the price increases for everyone through subsidies.
"It's about supporting people with normal and low incomes in a targeted manner," said Heil.
Inflation in Germany: According to Heil, a gas supply stop would lead to a double crisis
With a view to a possible gas supply stop, Heil said that a unilateral gas embargo by Germany towards Russia "would plunge us into a double crisis, then we would be in stagflation, i.e. in an economic crisis and prices rising even more".
Stagflation is "the horror of all economists and politicians," he added.
"This must be prevented.
And thank God our economy is still growing.” If the situation “escalates economically”, the federal government will act and, for example, further extend short-time work, the SPD minister explained.
“At the moment we don't expect the sky to fall on our heads this year.
We have economic growth and an extraordinarily stable job market," he said.
"If the situation escalates economically, we will not hesitate for a second and act decisively, for example by further extending short-time work."
(lp / dpa)
