German industry to pay 40% more for energy in 2023

Posted on February 3, 2023   |  

German industry will pay 40% more for energy in 2023 compared to 2021, before the energy crisis.

In 2022, higher corporate utility bills were contained as long pass-through times from wholesale markets and government interventions reduced the direct hit from surging prices as Russia curbed fuel exports to the West.

The price increases will hit corporate profits in Europe by 1-1.5% and lead to lower investment, which would be 25 billion euros ($27 billion).

The crisis could lead to de-industrialization and a loss of competitiveness against the United States because labor costs and exchange rates have a larger impact on manufacturing than energy prices.

Exporters lost market shares in agrifood, machinery, electrical equipment, metals, and transport, and the relative beneficiaries tended to be Asian, Middle Eastern, and African, not American.

The German government's one-time payment to help private households and small businesses with gas prices have cost 4.3 billion euros so far.

Berlin saved 12 billion euros for the payment, but 4.3 billion euros was not the final cost as many eligible firms had not yet applied for the aid.