Germans “will be poorer” because of the war in Ukraine

“It is impossible for this to end without loss to German society, it is unthinkable,” Robert Habeck, public broadcaster ZDF, said on Wednesday. “I believe that we are ready to pay this price, which is quite small compared to the suffering in Ukraine.”

According to preliminary data, inflation in March amounted to 7.3%, according to the country’s Federal Statistical Office. This is the highest level in over 40 years.

The main culprit: rising prices for natural gas and oil, which are up nearly 40% year-over-year.

growth energy prices were a problem months before Russia invaded Ukraine, but the war — and the fear that it will lead to supply crisis in Europe – raised prices even more. This is of particular concern to Germany, the largest consumer of Russian energy resources in Europe.
The German government announced on Wednesday that payments dispute with Russia, which demanded that “unfriendly” countries pay for their natural gas in rubles, rather than in euros or US dollars specified in the contracts, could lead to a deficitand, ultimately, regulation.

“High dependence on energy supplies from Russia carries with it a significant risk of lower output and even a recession with much higher inflation,” the German Council of Economic Experts said in a statement on Wednesday.

“Germany must immediately do everything possible to take precautionary measures against the suspension of energy supplies from Russia and quickly end its dependence on Russian energy sources.”

The council cut its forecast for GDP growth this year to 1.8% from 4.6% in December, citing inflationary forces and supply chain disruptions caused by the war in Ukraine.

The central bank of Europe has so far refrained from raising interest rates, unlike its counterparts in Europe. United States and the UK, which have been trying to curb inflation in recent weeks.

— Inke Kappeler and Mark Thompson contributed reporting.

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