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German coalition agrees on subsidised electricity price for industry

Friedrich Merz, the German Chancellor said that Germany's ruling parties had agreed to introduce an energy subsidy for energy-intensive industry until 2028 in order to cut costs and boost Europe’s largest economy.

German companies have complained for years that high energy costs put them at a disadvantage in the global market. This includes automakers and steelmakers.

After coalition talks, Merz, the conservative leader of the coalition with his Social Democrat partners, announced that the price of subsidised electricity for industry would be fixed at 5 eurocents per kilowatt-hour until 2028.

Merz stated that the goal is to reduce production costs and significantly ease the burden on our economy.

EU rules on state aid must be followed.

Merz stated that "Discussions have been completed with the EU Commission and we are expecting to be approved for this."

The VCI, the association of the chemical industry, called the measure helpful but said that the government must do more to make Germany competitive in the industry.

In a press release, VCI's Wolfgang Grosse Entrup warned that the situation was "growing more acute" for businesses.

German voters voted Merz into office in February after he promised to boost German Industry during an extended economic downturn.

The coalition and the chancellor also agreed to tender 8 gigawatts for gas power plants and reduce air traffic fees, saving the aviation industry 400 million euros. The exchange rate is $1 = 0.8575 euro. (Reporting and editing by Mark Potter, Lisa Shumaker and Andreas Rinke)

(source: Reuters)