Germany unveils $1.9-bn fuel price relief package amid energy shock

Following talks between his CDU party and its coalition partners, Chancellor Friedrich Merz said his government has decided to cut the tax on petrol and diesel by around 17 euro cents ($0.19) for two months.

Germany yesterday announced a €1.6-billion ($1.9-billion) fuel price relief package for households and businesses struggling with the energy shock triggered by the Middle East conflict.
Chancellor Friedrich Merz said his government has decided to cut the tax on petrol and diesel by around $0.19 for two months.
The funds for the relief measures would be financed by higher taxes on tobacco.

The announcement followed another surge in oil prices after the US-Iran peace talks collapsed and US President Donald Trump’s decision to blockade the Strait of Hormuz.

The war “is the root cause of the problems we face in our own country”, said Merz, stressing that Berlin is doing all it could to try to end the conflict.

“This will very quickly improve the situation for drivers and businesses in the country, and above all for those who, mainly for professional reasons, spend a great deal of time on the road,” he told a news conference in Berlin.

The funds for the relief measures would be financed by higher taxes on tobacco, a finance ministry spokesman was cited as saying by global newswires.

Employers can also pay staff tax-free bonuses of up to €1,000 ($1,170) to mitigate the impacts of inflation, which has already started rising in Germany, the government announced.

“At the same time, we cannot offset every single outcome on the market with government funds… The state cannot absorb all uncertainties, not all risks, not all disruptions in global politics,” Merz cautioned.

He said the war’s effects are likely to last long. “The German economy will face a significant burden over an extended period,” he added.

Fibre2Fashion News Desk (DS)