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FINANCIAL CRISIS

Industrial federation says crisis creates credit problems

The international financial crisis will now make credit conditions tougher for German companies, the head of the national industrial federation BDI said on Tuesday in a press interview.

Industrial federation says crisis creates credit problems
File photo os werner Scnappauf, BDI head. Photo: DPA

“It will be harder and more expensive for companies to obtain credit,” Werner Schnappauf told the Financial Times Deutschland. He added that it was certain that the financial crisis would hit the economy in general in the coming months.

The crisis, combined with higher raw material costs and a strong euro in the first half of 2008 would undermine German growth, the BDI forecast, estimating that the crucial export sector would grow by 3.9 percent this year and by 1.9 percent in 2009. German exports, the motor of Europe’s biggest economy, expanded in 2007 by 8.5 percent.

According to a study by the research group Factset that was quoted in the business daily Handelsblatt, the top 30 listed German companies are expected to see their profits drop by an average of 7.5 percent this year, following four years of record profits.

“The state must take action. That is its duty now,” Schnappauf said in defense of repeated interventions by the German government in the past weeks. After agreeing to guarantee a large part of a rescue plan for the mortgage lender Hypo Real Estate, the government also said it would back fully private bank accounts, which contain more than €1.0 trillion ($1.35 trillion).

INDUSTRY & TRADE

Environment: Germany aims for carbon-neutral steel by 2050

Germany on Wednesday pledged to help its steel industry become carbon neutral by 2050, as the coronavirus pandemic squeezes a sector already in a prolonged crisis.

Environment: Germany aims for carbon-neutral steel by 2050
Economics Minister Peter Altmaier at the Steel Action Plan conference on Wednesday. Photo: DPA.

It is important to act now so the steel industry “will still be competitive and environmentally friendly … in 30 years' time,” Economy Minister Peter Altmaier said.

A proposed plan includes new criteria for awarding public contracts, a minimum quota of low-carbon or carbon-neutral steel in finished products, and a new “green steel” label, Altmaier said.

Industry figures cited by the economy ministry suggest steelmakers will need an extra €30 billion ($34 billion) to become carbon neutral by 2050.

But the plan unveiled Wednesday did not include any new government subsidies.

Europe's steel industry has been hit hard in recent years by falling prices owing to global overproduction, especially by China, and by US sanctions introduced in 2018.

The coronavirus crisis piled on more pressure with a drop in demand from key sectors such as the auto industry.

German steel production has fallen by 10 percent since 2010 and the number of workers in the sector has dropped by 4,000 to 86,000.

Industrial giant Thyssenkrupp said in May it was looking for a partner for a possible merger of its steel division, after years of troubles including a blocked merger with India's Tata Steel.

As part of its coronavirus recovery plans, Germany unveiled in June a nine-billion-euro scheme to become the world leader in green hydrogen technology.

Berlin is betting that fuel produced from renewable energy sources can both reduce carbon emissions — including in steelmaking – and stimulate the economy.

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