The coalition dispute over absorbing rising housing costs ended on Wednesday with a half-silver solution. Wifo boss Gabriel Felbermayr also criticized the housing costs support presented by the government. The measure will further fuel inflation. It is high time to get out of the “automatic inflation correction”. According to the economist, a corresponding entry would have been possible with a price brake on the benchmark rents.
The head of the economic research institute complained that the stock market was once again being used as a “watering can”. The subsidy is also paid out to people who do not have to pay higher rents at all. “The state does not have the extra 250 million euros that is now being spent.”
The money had to be raised again on the capital markets. “It certainly does not have an inflation-dampening effect. Instead, it leads to further elements in demand, which ultimately drives up prices.”
Government missed opportunity
But you have to start somewhere, says Felbermayr in view of the double-digit inflation, otherwise there is a risk of “losing price competitiveness with other countries”. Persistently high inflation also weakens social cohesion and slows down economic growth. “These are things that we urgently need to counteract.” The government missed an opportunity with the rents.
“Don’t delay inflation”
In principle, in the early stages of the inflationary crisis, it was right to relieve the population through direct payments and not to intervene too much in the markets. “It was about getting the price signals across to people. However, inflation “should not be dragged from one year to the next”. “This must now become a political priority.”
Source: Krone
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