Recession fears shake Germany as energy costs hit business
“Not pasta then?” Germans quipped earlier this month, on hearing that of all things, a toilet paper manufacturer had gone bust.
After all, while toilet paper was the second most sought-after supermarket item during the height of the pandemic, pasta was the first. Consumers were strictly rationed to just one or two packets of rolls to ensure that no one went without. But having boomed during the pandemic, the luxury brand Hakle from Düsseldorf – known for “bringing comfort since 1928” with its three-ply rolls – has bombed as a result of the energy crisis. It is the first large German consumer goods producer to collapse because of soaring energy and raw material costs, and there is much to suggest that it will be followed by many more.
Last week the Munich-based Ifo Institute for Economic Research slashed its prognosis for German growth, declaring “we are heading into a winter recession”. It forecast Europe’s largest economy would shrink by 0.3% in 2023, after growing by just 1.6% this year. Inflation is forecast to hit 8.1% this year and 9.3% in 2023.
“The cuts to gas supplies from Russia this summer and the drastic price increases they triggered are wreaking havoc on economic recovery following the coronavirus,” said Timo Wollmershäuser, Ifo’s head of forecasts, adding that he did not expect a “return to normal” until 2024, when 1.8% growth and 2.4% inflation could be expected.
The German chancellor, Olaf Scholz, is travelling to the Gulf this weekend asto secure supplies of liquified natural gas (LNG) from the United Arab Emirates, as Russia chokes off its supply of gas. The economy minister, Robert Habeck, said: “The gas supply is gradually broadening and the government is permanently in talks with many countries, also
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