BDI (entrepreneurs): 1 in 3 German companies could close due to the energy crisis. Fury against the Minister of Economy Habeck (green)
The German business association BDI conducted a survey of companies in the industrial sector . 58% described the explosion in energy costs as "a great challenge" and 34% said it is threatening their existence, thus one in three companies. According to the BDI, nearly one in 10 companies in Germany has already reduced or even suspended production.
This applies to all manufacturers, from consumer goods to commodities to specialized goods. " Every day we receive emergency calls from companies that are on the verge of shutting down production, also because these huge increases in energy prices can no longer be offset by price increases for customers ", warned Hans Peter Wollseifer, president of the German Confederation of Crafts, in an interview with several journalists. He warned that Germany could see more failures now than during the COVID-19 pandemic.
There are new examples every day: Toilet paper manufacturer Hakle filed for bankruptcy, citing an increase in production costs that could not be absorbed by retail prices. The steel company Arcelor Mittal has closed two production plants in northern Germany and put its employees on layoffs so that the state unemployment insurance will intervene to pay their wages.
A company's cessation of production usually has far-reaching consequences for other sectors of the economy. An emblematic case is that of Stickstoffwerke Piesteritz, in Saxony-Anhalt, which can no longer afford to operate its ammonia plants and has therefore closed them. This has led to a shortage of “AdBlue”, the urea solution that purifies the exhaust gases emitted by diesel vehicles. If a vehicle runs out of fluid, its engine will not restart until the AdBlue tank is filled, so that even the transport of goods with diesel engines could suffer a setback. In Italy, Yara has also closed the production of this apparently secondary but essential product.
Economists believe that Germany is heading into a recession – a period of temporary economic decline during which trade and industrial activity decline, generally identified by a decline in GDP in two successive quarters – comparable to the economic collapse during the COVID pandemic. Business associations are unanimous in calling for the German government to immediately launch assistance programs and find emergency solutions for the economy.
The German government is under increasing pressure. How much pressure he is under became clear this week when visibly exhausted Economy Minister Robert Habeck appeared during a television interview on public broadcaster ZDF and was asked if he feared a wave of insolvencies. In an obvious attempt to make the situation seem less dramatic, he spoke incoherently, leaving the audience to wonder if the minister understood what insolvency entailed, that is, the bankruptcy of companies, stating, not lucidly, that companies "should close without fail ". Yet another incompetent who came to power because he was a bard of Green ideology.
Two days later, speaking to the Bundestag, the federal parliament promised greater support for the business sector. "We will protect small and medium-sized businesses," he said, announcing aid payments for the fall and winter, comparable to the assistance provided during the coronavirus pandemic. Starting in October, companies forced to cut production to save gas will start receiving financial compensation, Habeck said.
Financial assistance is provided for a limited time, so companies can hold out until European efforts to contain high electricity and gas prices come into effect, he added. It will be enough? Steffen Müller, a professor at the Leibniz Institute for Economic Research in Halle (IWH), said that rising energy prices, as well as soaring interest rates on loans, are not a temporary phenomenon, but they will remain in force in the medium and long term. We cannot think of solving gas shortages in three months, as if it were a banal lockdown for covid-19. According to the professor, it would be more logical to provide medium-long term loans at low or zero interest rates for energy conversion for companies. A clear idea, but to convert into what? Because solutions are in short supply …
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The article BDI (entrepreneurs): 1 in 3 German companies could close due to the energy crisis. Furia against the economy minister Habeck (green) comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/bdi-imprenditori-1-su-3-aziende-tedesche-potrebbe-chiudere-per-la-crisi-energetica-furia-contro-il-ministro-delleconomia-habeck-verdi/ on Mon, 12 Sep 2022 13:42:46 +0000.