The country will lose 220 billion euros ($ 238 billion) in economic output over the next two years in the event of such a shock, according to a report by five German economic institutes. Germany’s GDP will grow by only 1.9% in 2022 and will shrink by 2.2% in 2023. Growth will be 2.7% this year if gas continues to flow.
Reducing Russian gas would push Europe’s largest economy into a “sharp recession,” said Stefan Kuts, research director at the Institute for World Economy in Kiel and one of the report’s authors.
EU leaders have agreed to phase out imports of Russian coal. An EU source told CNN Business that coal would be banned by August. A new, sixth round of sanctions is already being discussed, and some EU officials have called for action on Russia’s oil and gas exports.
But a ban on Russian gas in the near future will wreak havoc in Germany, which relies on Russia for about 46 percent of its natural gas in 2020, according to the International Energy Agency. It uses fuel to heat homes, generate electricity and help power its factories.
The European Union is already trying to reduce Russian gas imports by 66% this year and completely end its dependence on Russian energy by 2027.
Last week, German Finance Minister Christian Lindner said the country was moving “as fast as possible” to give up Russian energy, but poured cold water on a sudden shutdown.
“The question is, at what point are we doing more harm to Putin than to ourselves?” Lindner said in an interview with Die Zeit.
“If I could just follow my heart, there would be an immediate embargo on everything. However, it is doubtful that this will stop the military machine in the short term, “he added.
Targeting Russian gas supplies is likely to worsen inflation in Germany, which reached its highest level in more than 40 years last month. Consumer prices increased by 7.3% compared to the previous year, according to data from the Federal Statistical Office.
The main culprit: Rising natural gas and oil prices, which rose by nearly 40% over the same period.
BDEW, an association of German energy and utilities providers, said last week that it was “ready to draw up a detailed plan” for a quick shutdown of Russian gas, but urged politicians to proceed with caution.
“After all, [cutting Russian gas] it is nothing less than the transformation of the entire German industry, “said Marie-Louise Wolf, president of BDEW, in a statement.
– Chris Liakos contributed to the report.