Germany: Limiting economic pain from going cold turkey on Russian gas

  • Should gas supplies from Russia come to a halt, we estimate Germany’s supply gap at 30% of total gas consumption. Additional storage withdrawal, tapping new gas suppliers, substitution measures such as fuel-switching (from gas to other energy sources such as coal and nuclear power) and self-rationing by the private sector due to sky-high gas prices will help reduce the shortfall and cause limited economic disruptions. However, the remaining gas supply gap of 13% will require rationing actions.
  • The impact of rationing on economic activity and employment in Germany will depend to a large extent on which gas consumers will have to face the brunt of the shortage. Household gas consumption – which is currently protected by Germany’s Gas Emergency Plan – offers significant saving potential. For every 1pp reduction in the gas consumption of households, gross value added to the tune of EUR2.5bn and up to 25,000 jobs will be protected in manufacturing – not accounting for positive second-round effects. To limit the economic outfall, the burden of rationing should hence be spread widely.


Markus Zimmer
Allianz SE