Massive British Bailout of Inflation, Bigger Than 2008 Bank Bailout, Sets the Policy
Sept. 12, 2022 (EIRNS)—With European Central Bank President Christine Lagarde having insisted that the ECB will not bail out producer price and consumer price inflation—governments must do it—the British, as usual, have led the way in monetarist extremism. The bailout of at least $150 billion announced by Prime Minister Liz Truss is on a scale other European governments have not reached, but are ordered to do so.
The household energy aid alone, announced by Truss, will cost more than £120 billion ($140 billion); the corporate bailouts will add at least £40 billion (liquidity bailout), plus additional subsidies for the prices of energy. The total will be a much bigger bailout, even adjusting for the lower value of sterling now, than the £137 billion bailout of the big banks in 2007-09, according to British economic think-tanks quoted by OilPrice.com; which moreover expect that it will lead quickly to rationing. This boils down largely to the British government paying the energy bills of households and corporations and helping further to inflate those bills.
The German €5 billion fund to help energy-intensive companies, by the same orders, is not enough, although okayed by the EU Commission. The German government has created an emergency intervention fund in the range of €5 billion to support energy-intensive companies through the coming energy supply crisis and prevent their collapse. So far, 3,200 requests for such support have been registered at the fund, but there are many more to come as even the fund’s managers expect. As the bigger companies alone with their electricity and gas bills in the range of millions of euros each depending on the fund’s support, not that much money will be left to also support the hundreds of thousands of medium-sized companies that see their energy bills sky-rocketing these days. A wave of production stops at companies, with the related layoffs, is therefore preprogrammed. The said fund has so far only approved 24 of the 3,200 requests. Keep in mind that many companies have still not received the support promised to them during the past two years of pandemic.