Crisis Management

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What's going on?

Data out on Wednesday showed that German consumer prices jumped more than expected in March, even as the country’s government is forced to resort to desperate measures.

What does this mean?

Germany’s been struggling with supply issues for a while now, but these sanctions on Russia have made a bad situation even worse. Case in point: Germans had to fork out a massive 40% more on energy this month than the same time last year. And since that encouraged businesses to pass some of those costs onto customers, consumer prices came in 7.3% higher this month than at the same time last year – way above the 6.3% economists expected, and the biggest rise in prices for over 40 years.

Why should I care?

Zooming in: Germany’s standing its ground.
Meanwhile, the German government is playing a dangerous game: it’s refusing to pay for Russia’s natural gas in rubles as requested, which risks incentivizing the country – which supplies more than half of all its natural gas – to turn the taps off altogether. And that, the government has warned, would send prices even higher, possibly even triggering a recession. So in an effort to keep that from happening, Germany initiated the first step of a series of emergency measures on Wednesday: it’s going to start monitoring the country’s energy consumption daily, and called on it to reduce usage where it could.

The bigger picture: Germany and the US team up.
It makes sense, then, that Germany would be trying to wean itself off Russian gas completely. And it’s just taken a big step toward doing just that: the country just announced a deal with the US that will see the country ramp up exports of natural gas to the European Union. And their plans don’t stop at gas, with the two countries saying they’ll work together on a renewable energy plan that could reduce the need for fossil fuels altogether.

Originally posted as part of the Finimize daily email.

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