Berlin, Nov 9 (UiTV/IANS) – The current spike in energy prices will cost Germany nearly $110 billion in real income by 2023, with the funds flowing to sellers abroad, according to a study published by the ifo Institute for economic research.
The losses will equate to 3 per cent of Germany’s annual economic output, Xinhua news agency reported citing the study released on Tuesday.
The total amount includes 35 billion euros from last year, 64 billion from this year, and another 9 billion euros of losses predicted for 2023.
This is the highest real income loss since the second oil crisis in the late 1970s, according to the study.
“We can expect the current drop in real income to persist over the next few years,” said Timo Wollmershaeuser, head of forecasts at ifo.
Losing Russia as a supplier means that energy prices are likely to remain high for the long term, and it will take time to become independent from energy imports, Wollmershaeuser added.
Gas supplies from Russia to Europe through the Nord Stream 1 pipeline were cut in September. The important pipeline was later rendered unusable by explosions, and Russia subsequently offered to use Nord Stream 2 instead, which Germany and its partners have refused.
Energy prices in Germany have skyrocketed since the start of the Russia-Ukraine war.
In October, energy prices were 43 per cent higher than last year, driving inflation in Europe’s largest economy to 10.4 per cent, according to preliminary figures by the Federal Statistical Office (Destatis).
This development is suppressing consumption in Germany.
To cushion the impact of high inflation on consumers and businesses, the German government has approved relief packages worth 95 billion euros.
In addition, an even bigger “protective umbrella” of up to 200 billion euros has been set up, to cap electricity and gas prices.