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ECONOMY

Super-rich families lose billions in crisis

Germany's 20 wealthiest families have lost about €40 billion in the economic crisis in share values alone, the financial magazine WirtschaftsWoche reported in its latest edition.

Super-rich families lose billions in crisis
Photo: DPA

The richest families have lost “an average of 30 percent” of their fortunes since the summer of 2007, leading asset manager Joachim Paul Schäfer told the magazine. “It is clear now that the present crisis has inflicted much deeper wounds on big family fortunes than the last four or five recessions combined,” he said.

“Fortunes which have grown over the generations are as threatened as much as they were in the hyperinflation of the 1920s or during the depression.”

The value of the shares held by the Quandt industrial dynasty, which owns half the capital of carmaker BMW, has halved in a year, according to WirtschaftsWoche. The magazine Manager-Magazin claimed in October that 122 German individuals or families were worth at least a €1 billion.

Norbert Clément, manager of a billionaire family office in Hofheim, told WirtschaftsWoche, “This year, and probably next year, many wealthy family firms will not make any dividends.”

According to Clément, this is expected to cause real distress to individual members of the families.

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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