German experts defend aid to households against inflation

According to Fritzi Köhler-Geib, chief economist at the state bank KfW, if the energy situation – less gas available in the medium term and more expensive – is compounded by high wage demands, there is a threat of a spiral of wage prices, and several years of stagflation (high inflation and a weak economy) in Germany.

Several renowned economists defended the need for the state to specifically support needy households, due to the war crisis in Ukraine, energy shortages and inflation.

“An attempt was made to reduce the price of fossil fuels – with moderate success.

We must cushion (the price) those who cannot bear it,” said Veronika Grimm, an expert member of the so-called “Group of Wise Men” that advises the German government on economic matters, on Saturday (25.06.2022).

“I wouldn’t say we’re already in a spiral of wage prices. But the risk exists,” Grimm said.

Marc Schattenberg, an economist at Deutsche Bank Research, and Katharina Utermöhl, an economist at the Allianz Group, also called for more state aid.

“Support for needy households may be more targeted than what has been shown recently,” Schattenberg said.