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ECONOMY

Recession cuts ranks of German billionaires

Germany's worst post-war recession has cut the ranks of the country's billionaires to 99 and the fortunes of those still making the grade have plummeted dramatically, according to a survey released this week.

Recession cuts ranks of German billionaires
Photo: DPA

Europe’s biggest economy now has 99 individuals or families with assets of at least a €1 billion ($1.47 billion), down from 122 a year ago, according to Manager-Magazin.

Germany’s 300 richest individuals or families had assets worth €285.6 billion, down €39 billion or 12 percent from 2008.

The Porsche family was the worst hit, with the sports car maker’s failed attempt to take over Volkswagen triggering a 71-percent or €11-billion drop in their assets, the magazine said.

Other major losers included Maria-Elisabeth Schaeffler, whose fortune slumped 92.4 percent in value after her firm’s takeover of auto parts maker Continental. Madeleine Schickedanz, part-owner of the insolvent Arcandor retail group, fell out of the top 300.

Top of the list were the owners of the Aldi chains of discount supermarkets, Karl Albrecht and his brother Theodor Albrecht, who with their families sit on fortunes worth €17.35 billion and €16.75 billion respectively.

Others in the top 10 include Dieter Schwarz, owner of the Lidl supermarket chain; the Otto mail order firm’s family owners; the Riemann family, part owners of consumer goods multinational Reckitt Benckiser; and BMW heiress Susanne Klatten.

The export-heavy German economy has been among the worst hit by the global downturn, and is on course to slump between four and five percent this year, the government said Tuesday.

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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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