Germany will never fully recover from energy crisis, warns RWE

GERMANY’S industrial heartlands are unlikely to ever fully recover from the energy crisis, the boss of one of the country’s leading electricity companies has warned.

The chief executive of energy company RWE said structurally higher gas prices since Russia’s invasion of Ukraine had left Europe’s largest economy at a permanent disadvantage. In comments first reported by the Markus Krebber said: “Gas prices in continental Europe, especially in Germany, are structurally higher now because we in the end depend on LNG imports. The German industry has a disadvantage.”

Germany’s industry was badly affected by gas prices soaring in the wake of the war, with energy-intensive sectors being forced into large-scale layoffs amid the end of cheap gas.

Mr Krebber’s remarks come as gas prices plunged to their lowest level since 2021 in February, although they have since edged up slightly amid geopolitical tensions in the Middle East.

Mr Krebber said: “You’re going to see a bit of recovery, but I think we’re going to see a significant structural demand destruction in the energyintensive industries.”

Europe’s largest producer of chemicals, BASF, was last year forced to slash 2,600 jobs as it scaled down production in Germany. Mr Krebber also criticised Angela Merkel, the former German chancellor, for closing down the country’s nuclear fleet in 2011, saying she had made a “mistake” by eliminating the energy source without a better alternative to Russian gas. It comes as the German economy faces significant headwinds, with the International Monetary Fund predicting it will have the lowest growth in the G7 this year.

Figures from the world’s lender of last resort show it was the only economy in the G7 to shrink last year, emerging 0.3pc smaller by the end of 2023.

The malaise gripping the manufacturing powerhouse is also apparent among households, as property prices recorded the sharpest drop in 60 years last year. Five of Germany’s leading research institutes have recently dialled down their growth forecasts for the country amid sluggish exports and reduced domestic demand.

They predicted Germany may only eke out 0.1pc growth for this year, far short of expectations of 1.3pc six months ago. However, households and businesses may soon find relief in interest rates coming down from a 22-year high, with the European Central Bank expected to start cutting in June.