German Finance Minister Warns Nation of Looming 'Loss of Prosperity' Amid Hike in Energy Prices

Last month, the inflation rate in Germany soared to 7.3 percent, with diesel fuel prices standing at 2.22 euros per litre, something that followed Berlin joining its EU partners and the US in imposing "severe" sanctions on Russia over Moscow's ongoing special military operation in Ukraine.

Germany's Federal Minister of Finance Christian Lindner has warned of declining living standards of ordinary Germans and rising inflation as a result of the Ukraine crisis.

In an interview with the newspaper Bild am Sonntag, he referred to Russia's ongoing special military operation in Ukraine, claiming that the fighting between Russian and Ukrainian forces is "making us all poorer, for example because we [the German government] have to pay more for imported energy".

"Not even the state can compensate for this loss of prosperity", Lindner, who is also a member of the German Free Democratic Party, said, pledging that the federal government will "cushion the biggest shocks".

At the same time, he warned that "since funding is limited, these [supportive] measures can only be temporary".

Touching upon an inflation rate of 7.3 percent in Germany last month, Lindner said that he was seriously concerned about the country's economic development because "growth is declining, [and] prices are rising".

According to him, the government is doing its best to avoid so-called stagflation, a situation that sees a country's economic meltdown amid increasing inflation.

The finance minister added that in the long term, the government will have to "lay new foundations for prosperity" and that Germany "must renew its growth model for a social and ecological market economy".

Lindner stressed that "if there is no new catastrophe, the [nation's] debt brake must be adhered to", in a nod to a budget amendment stipulating the maintenance of a debt to GDP ratio of around 60%.

This came after he warned against imposing an embargo on Russia and abruptly stopping energy supplies to Germany due to Moscow's special operation in Ukraine.

Speaking at a party conference, the minister called for more efforts to end Germany's energy dependence on Russia as soon as possible, but added that the government "shouldn't decide on any sanctions [against Moscow] that weaken" his country "strategically".

Scholz Says Anti-Russian Sanctions Should Be 'Proportionate'

The remarks were preceded by German Chancellor Olaf Scholz admitting last week that Western sanctions against Russia are hitting "many German citizens hard, and not just at the petrol pump". He added that the restrictions must remain "proportionate" so that those countries that implemented the sanctions aren't damaged more than Moscow.

Scholz also pledged to end dependence [on Russian energy] as quickly as possible, but warned that "to do this in one day would plunge" Germany "and the whole of Europe into a recession". According to the chancellor, "hundreds of thousands of jobs and entire branches of industry would be at risk".

Russia's Special Op in Ukraine

Russia launched a special military operation to demilitarise and de-Nazify Ukraine on 24 February after the Donetsk and Lugansk People's Republics called for Moscow's help amid increasing attacks by Ukrainian troops. The Russian Defence Ministry emphasised said that the operation is only targeting Ukrainian military infrastructure and that civilians are not in danger.

In response, the United States and its allies rolled out full-blown sanctions against Russia, including restrictions on the Russian central bank, export control measures, and closure of airspace to all Russian flights. As part of the sanctions, US President Joe Biden announced the country's ban on all Russian energy exports.

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