Cost of Living Crisis: What are the rest of the G7 doing? | G7

As Liz Truss’s government prepares to unveil a huge package of tax cuts, along with energy price caps for UK households and businesses worth an estimated £ 150 billion, here’s what the rest of the G7 to alleviate the cost of living crisis.

France

French ministers argue that France has been the most generous country in Europe in helping families cope with the cost of living crisis, notably by limiting increases in gas and electricity prices. Until the end of this year, gas prices will remain frozen and electricity price increases will be limited to 4%. At the beginning of next year, the increase in electricity and gas prices for households will be limited to 15%.

Last month, the French parliament passed a wide range of new measures for families as rising inflation erodes wages. These include the increase in public sector pay, the increase in pensions and some welfare payments of 4%, the imposition of a ceiling on rent increases at 3.5% for existing tenants in mainland France, and the increase in income-proof scholarships.

The government has also subsidized a discount on gasoline and diesel prices. Initially worth 18 cents per liter, it was raised to 30 cents in September and October, and then dropped to 10 cents from November.

Companies are encouraged to offer employees an annual tax-free bonus of up to € 6,000 (£ 5,240), increased from a previous € 1,000 limit. Employees covered by the 35-hour workweek will be able to convert overtime days into extra cash.

The government has also abolished the television license fee (€ 138 per year in mainland France).

Last December, the government granted one-off payments of € 100 to help low-income families cope with rising fuel prices. In September, the government granted an “exceptional” contribution of € 100 – plus € 50 for each child – to low-income families for welfare benefits.

Since autumn 2021, the cap on gas and energy prices, including fuel discounts, has cost the French government 24 billion euros. France also intends to completely renationalise its indebted electricity giant, EDF, in response to the energy crisis.

Angelique Chrisafis

A flag with the EDF logo flutters next to the Bouchain power plant
France will completely renationalise its electricity giant, EDF. Photography: Pascal Rossignol / Reuters

Italy

The Italian government has allocated 59.2 billion euros since last September to protect families and businesses from the surge in energy prices, with the latest tranche of 14 billion euros announced by the prime minister, Mario Draghi, last week.

He said the package included Italy “among the countries in Europe that have spent the most” in addressing the issue. The measures include the increase and extension until November of tax credits for energy-intensive companies, reliefs for small and medium-sized enterprises and greater financial support for low-income households.

The scheme will also provide a one-off contribution of € 150 for 22 million workers and retirees who have an annual income of less than € 20,000. Meanwhile, the cut in petrol excise duties will remain in effect until the end of November. Draghi said the government “helps families and businesses without putting public finances at risk and creating tensions on the markets”.

However, a new government will be responsible for carrying out the measures, addressing the cost of living challenges in the coming winter, following Sunday’s elections. A coalition made up of far-right Brothers of Italy, Silvio Berlusconi’s Lega and Forza Italia is expected to win the vote and should renew at least some of the measures to see Italy through the winter.

Angela Giuffrida

The logo of the German energy services company Uniper
Germany will nationalize the energy supplier Uniper. Photography: Thilo Schmülgen / Reuters

Germany

So far the German government has announced a total of three aid packages to help consumers and businesses cope with inflation which stood at 7.9% in August.

Totaling more than 95 billion euros, and spread across the federal government, 16 states and municipalities, the measures include a one-time payment of 300 euros for retirees and a September tax relief of the same amount for regularly employed persons. one-off of 200 euros for university students, increase in the rent to cover the increase in heating costs, increase of 500 euros in welfare, one-off bonus of 100 euros per child and permanent increase of 18 euros per child monthly allowances family members.

Germany is also shifting the income tax bracket to prevent an increase in tax liabilities, expanding state lending structures to help otherwise healthy businesses, and extending a heavily subsidized public transport ticket regime (yet to be defined).

It also includes support for an EU effort to reduce the profits of energy companies (under discussion), as well as measures to curb the huge pace of rising electricity bills and a delay in the implementation of the expected increase in carbon emissions prices in 2024.

The government has promised to “do everything possible to ensure that the energy supply continues to function”. This included this week’s decision to nationalize the energy supplier Uniper, at a cost of € 29 billion, on top of the € 11 billion it has already injected into two other gas importers.

Kate Connolly

A man filled his petrol tank in central Rome in June.
A man filled his petrol tank in central Rome in June. Photography: Alessandra Tarantino / AP

Japan

Japanese Prime Minister Fumio Kishida has seen his approval ratings plummet over price increases and revelations about his party’s ties to the Unification Church in the wake of Shinzo Abe’s assassination.

After decades of deflation, households in the world’s third largest economy have been hit by rising energy bills and will be paying more for another 6,500 food items within the next month, including basic necessities like bread and noodles. Although the rise in inflation was modest compared to many other countries, consumer price inflation exceeded the 2% target set by the Bank of Japan for five consecutive months.

In an effort to soften the blow, Kishida said the government will aim to keep the price of imported wheat at current levels and consider maintaining subsidies to oil wholesalers to stabilize gasoline and kerosene prices. He has called for the restart of nuclear reactors that passed the post-Fukushima safety tests to meet the expected increase in electricity demand this winter.

The Bank of Japan’s decision to keep interest rates ultra-low – a stance it held on Thursday – helped drive the yen to a 24-year low against the US dollar, fueling the rise in the cost of imported fuel and food. .

In response, the government intervened on currency markets on Thursday for the first time since 1998 and is likely to present an additional budget in the coming weeks that could include at least $ 105 billion in fresh spending for distressed retailers and families.

Justin McCurry

Justin Trudeau
Canadian Justin Trudeau announced new measures to help with the steep rise in the cost of living, Photograph: Canadian Press / Rex / Shutterstock

Canada

Canadian Prime Minister Justin Trudeau recently announced new measures to help with the steep rise in the cost of living across the country, including the worst rise in food prices in four decades. His government has faced increasing political pressure to help the most affected citizens as inflation amplifies an ongoing accessibility crisis.

Trudeau expects parliament to pass the new measures in the coming weeks, including a one-time benefit of $ C500 for low-income renters. A six-month doubling of the sales tax cut for low-income workers is expected to affect at least 11 million Canadians. A new dental care program will be launched for children from low-income families, which will give families C $ 1,300 per child over two years. Canada’s intervention will cost CAD 4.5 billion.

Most of the measures had been promoted by the left-wing New Democratic party, which agreed to keep Trudeau in power until 2025 in exchange for a social program to benefit vulnerable and low-income populations.

Canada’s inflation rate fell to 7% from 7.6% a month earlier when gas prices fell but food costs remained high.

“Even if we are going in the right direction, it is still too high,” Paul Beaudry, deputy governor of the Bank of Canada, said in a recent speech.

Leyland Cecco

United States

One issue is at the forefront of US voters’ minds as Joe Biden struggles to stand up to Congress in November’s midterm election: the cost of living crisis.

Inflation is now running at rates never seen since the 1980s, driving up the cost of everything from food and housing to cars and medical care.

The Federal Reserve spearheaded the fight to lower prices, announcing a series of unusually large interest rate hikes in hopes of slowing the economy and bringing inflation back to the 2% target rate from the current 8.3 level. %.

But the Biden administration has a number of plans, many inspired by the supply chain problems that arose during the coronavirus pandemic, that aim to make the United States more resilient to sudden price swings.

The plans include the Inflation Reduction Act, which is expected to cost $ 437 billion over 10 years.

It will reduce the costs of prescription drugs and health care and increase spending on green energy technologies. The plan also includes spending $ 52 billion to increase domestic semiconductor production. The shortage of semiconductors has led to a rise in the price of everything from cars to cell phones during the pandemic.

Biden also approved the release of 1 million barrels of oil per day from the Strategic Petroleum Reserve – the huge underground oil reserve of the United States – to lower gas prices.

Domenico Rush

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