The German government announced a $197bn (€200bn) fund to ensure security for German households and businesses amid the energy crisis.

In a news conference on Thursday, German Chancellor Olaf Scholz declared that his government would reactivate an economic stabilisation fund and “do everything it can” to reduce soaring energy prices.

The government announced a cap on gas prices, though gave few other details. Scholz said the government is putting up a “protective shield” to help families and businesses pay their bills during high inflation. 

The Economic Stabilisation Fund, established in 2020 to help businesses recover after the pandemic, would finance the £197bn.

However, Germany’s Federal Audit Court strongly criticised the government on Thursday for its scheme to fund a gas price cap, accusing the administration of violating debt rules by creating a €200 billion special fund. 

Germany’s Finance Minister Christian Lindner said he does not intend to go “down the path of expansionary fiscal policy.” This would involve tax cuts and increased government expenditure to boost the economy. According to the Guardian, doing so poses a risk of causing high inflation and devaluing the currency, which recently happened in the UK. 

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In September, Germany’s inflation rate increased by 10%. According to the German Federal Statistical Office Destatis, September 2022 rates were higher than last year by 43.95%.

Previously, Germany utilised the “protective shield” to help the country through the global financial crisis during the Covid-19 pandemic. 

Earlier this week, Scholz claimed that Russia had sabotaged the Nord Stream 1 and 2 pipelines in the Baltic Sea, using its energy exports as a “weapon”

Lindner said in the news conference: “We cannot accept this, and we are fighting back.” He added that the new aid measures were a “clear response to Putin”. 
Robert Habeck, Germany’s Federal Minister for Economic Affairs and Climate Action said: “With up to €200bn, we span a protective shield against the consequences of the Russian war aggression.”