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ECONOMY

Deutsche Post to trim operations

Germany's privatized postal service said on Sunday it planned to sell hundreds of its branch offices to other companies but had no plans to cut jobs in the process.

A Deutsche Post spokesman said the company was stepping up an ongoing strategic shift by unloading the overwhelming majority of its 850 smaller post offices on local businesses such as supermarkets, bakeries or news agents. The new owners would then offer the same products and services alongside their own core businesses.

A report in the German daily Lübecker Nachrichten said some 700 post offices with about 3,000 employees would be affected as part of a cost-cutting drive.

“We have never laid off any staff in this reorganization,” the spokesman said, adding that most of the branch offices had few employees. Deutsche Post closed about 400 branch offices in recent years and now works with more than 8,000 partner-run offices.

The Bonn-based company suffered a heavy blow last month with the departure of chairman Klaus Zumwinkel who is under investigation in Germany’s biggest-ever tax evasion probe.

Zumwinkel had overseen the privatization of Deutsche Post, which was formed in 1990 to take over the mail activities of the state-run postal services. The company went public in 2000 and is now a giant in the logistics sector.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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