Politicians want car scrapping money back

In light of the German auto industry’s buoyant earnings, politicians from the ruling coalition suggested Tuesday that the companies repay the money they earned during the government-sponsored “cash for clunkers” stimulus programme in 2009.

Politicians want car scrapping money back
Photo: DPA

Altogether the German government allocated €5 billion for the popular programme, enough to fund the €2,500-subsidy for two million new cars. Applicants junked cars at least nine-years-old to get new vehicles with the Abwrackprämie, part of the government’s second stimulus package.

Since then Germany car companies have reported steadily increasing sales, prompting Christian Democratic (CDU) budgetary policy expert Alexander Funk to tell daily Bild that Berlin should call on the auto industry to take part in paying for the programme.

Daniel Volk, member of the CDU’s junior coalition party the pro-business Free Democrats and member of the parliamentary budgetary committee, said German taxpayer should not have to bear the burden for benefiting the industry.

“The auto industry is the great profiteer of the car scrapping premium, for which the German taxpayers carried the costs,” he told Bild. “It is time that the branch takes on a portion of this.”

Meanwhile German luxury car maker BMW said Tuesday that its second-quarter net profit leapt seven fold to €834 million, exceeding market expectations.

Analysts polled by Dow Jones Newswires had forecast net profit of €674 million at the leading premium auto manufacturer.

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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.