Germany plans to cap energy prices from start of 2023

Germany put the finishing touches on an energy price cap, the cornerstone of a massive €200 billion package to shield households and businesses from rising costs.

During a press conference organised with representatives of the federal states, German Chancellor Olaf Scholz announced that Berlin plans to cap energy prices from the beginning of 2023.

The move is the cornerstone of a massive $198-billion package to ease inflationary pressure on households and businesses.

"It's important for all of us to find ways to relieve the burden on our families, elderly and the young" says Scholz, adding that the cap on gas prices "is more than what was paid in the past, but it is much less than what some have been offered now as a gas contract."

The major energy market intervention is deemed necessary to support consumers at a time when Europe’s largest economy is drifting towards recession and inflation has shot past 10 percent.

The plan will see the price for a percentage of household and businesses’ typical consumption capped at lower-than-market prices, according to a position paper from the government.

For gas, 25,000 larger businesses, as well as almost 2,000 hospitals and schools will benefit from the cap as soon as January 1 next year, under the plans.

Policymakers will “seek” to apply the relief retroactively from February 2023.

A similar price cap will also apply to electricity from the start of the new year in January, with the measures set to last through to the end of April 2024.