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Electricity Tax Cuts Not as Large as Headline Number Suggests

GERMANY

The German government came to an agreement on electricity subsidies yesterday. However, this will not directly impact CPI as the measures are solely targeted towards non-consumers.

  • The electricity tax for 2024 and 2025 for the manufacturing industry will be lowered from E0.01537 / kWh to E0.0005 / kWh (which is the EU-minimum). Additionally, prior programs for relief for energy intensive firms were extended.
  • Chancellor Scholz said that the size of the total programme will be E12bln in 2024 alone.
  • German justice minister Buschmann (market-liberal Free Democratic Party) posted on X that the tax cuts would amount to relief of E2.75bln.
  • This is because the E12bln programme succeeds a scheme where energy intensive firms were able to reclaim large parts of their electricity tax.
  • Due to this smaller size in net terms, the impact on the overall German fiscal position will be relatively small (and there had already been expectations some kind of scheme would be announced anyway). Hence there will be little impact on overall issuance.
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