Quelle gets €50 million in emergency loans

Insolvent German mail-order company Quelle got a massive credit injection of €50 million on Monday night after more than four hours of negotiations, government officials said.

Quelle gets €50 million in emergency loans
Photo: DPA

The states of Bavaria and Saxony, where Quelle conducts business, as well as banks and government officials, worked with the ailing company to secure a loan by December 31, 2009, Bavarian Finance Minister Georg Fahrenschon said after the meeting.

The emergency aid deal for the company, which is 80 years old and employs some 8,000 workers in central and Eastern Europe, is still pending approval by the EU Commission on Tuesday, he added.

Saxony Economy Minister Thomas Jurk explained that the federal government had agreed to contribute €25 million, Bavaria would pony up €20.5 million, and Saxony a smaller sum of €4.5 million.

German Economy Minister Karl-Theodor zu Guttenberg told broadcaster ZDF on Tuesday morning that the loans will give Quelle a fair chance to recover.

“We have to deal with taxpayer money responsibly,” he said.

Insolvency administrator Klaus Hubert Görg told the media he was relieved that a deal had been reached, but warned that the situation was still tenuous.

“We must not think that it’s a sure-fire solution,” he said.

Quelle, owned by insolvent tourism and retail group Arcandor, needs the loan to finance their new winter catalogue and ease debts.

The two companies practice a form of treasury called cash pooling, and much of Quelle’s liquidity had been filched by Arcandor recently.

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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.


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.