Germany faces €1 billion extra cost as EU allows wider industry power relief

BERLIN, June 9 (Reuters) - Germany may face around €1 billion euros in additional budget costs after the European Commission allowed stronger electricity price relief for industry than previously expected, Economy Minister Katherina Reiche told Handelsblatt on Tuesday.

Reiche said Brussels had agreed that, in 2026, a planned state-subsidised industrial electricity price could be combined with existing electricity price compensation, meaning both instruments could be used at the same time.

The industrial power price is a new support measure, while electricity price compensation has long helped companies offset costs linked to carbon pricing.

Reiche said the Commission had accepted Germany's argument that the step was necessary because of exceptionally high energy prices.

Energy costs have risen sharply since the start of the war in the Middle East, adding pressure on Germany's energy-intensive industries and broader manufacturing sector.

The additional spending comes as Finance Minister Lars Klingbeil prepares the draft budget for 2027, which is expected to be approved by the cabinet in early July, but still faces shortfalls.

(Reporting by Christian Kraemer, writing by Maria Martinez, editing by Friederike Heine)