IW Cologne: Gas price brake would also greatly relieve the wealthy

According to estimates by IW Cologne, the planned gas price brake would benefit the middle class and higher earners to a considerable extent.

IW Cologne: Gas price brake would also greatly relieve the wealthy

According to estimates by IW Cologne, the planned gas price brake would benefit the middle class and higher earners to a considerable extent.

Poor households and the lower middle class would receive the greatest percentage of relief based on their income, but in absolute terms around three quarters of the billions needed would go to the income groups above. The economists assume this in a study published on Friday. The client was the Association of Bavarian Business (vbw).

Since the structure of the gas price brake has not yet been determined and gas prices will also change in the course of the coming year, the calculations by IW Cologne are based on assumptions. A sample calculation was used to determine what distribution effect the gas price brake would have this year if it already existed.

Scientific calculations

For a basic consumption of up to 8,000 kilowatt hours of gas per year, the scientists assumed a capped price of 7.5 cents per kilowatt hour and an average market price of 15.2 cents. According to a simulation calculation by the IW, a gas price brake would cause costs of 11.7 billion euros under the assumptions mentioned, of which almost 2.9 billion would go to poor households and the lower middle class.

In relation to the average household income, the relief for the lower income brackets would still be higher, according to IW Köln. Households in the upper middle class would receive an average of half a percent of their net income, while households at risk of poverty would receive a little more than one percent.

In the coming year, however, the actual gas prices for most households will be above the assumed 15.2 cents. According to the federal government's current plans for the gas price brake, private households are to pay a guaranteed gross gas price of 12 cents per kilowatt hour for 80 percent of their previous consumption. The authors of the study also note that the gas price brake should go hand in hand with a "significant reduction in energy saving incentives".

Apart from the impact of various relief measures on citizens, the institute also estimated the impact on industry of the rapid increase in energy costs. According to the paper, the higher prices could mean additional costs of 60 billion euros for the manufacturing sector this year - assuming that companies do not reduce energy consumption and production.

However, the scientists see signs that many companies have already reduced their production. "In view of the high prices, production costs have risen so much that local companies can no longer compete internationally," write the authors.

"Further increases in prices or even rationing of the gas supply could put the industry under so much pressure that not all companies will be able to maintain production," warned vbw CEO Bertram Brossardt. "This will then also have an impact on the value chain and threaten jobs."

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