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ECONOMY

Exporters: We don’t need the euro

German exporters, the backbone of the biggest eurozone economy, could manage without the common euro currency, the head of their BGA industry federation, Anton Börner, said on Wednesday.

Exporters: We don't need the euro
Photo: DPA

“What is important for us is the free market, we do not necessarily need a common currency,” he told the foreign press association in Berlin. “Is there life for Germany after the euro? Yes there is.” Exporters “can live without the euro,” he added.

Börner was speaking one day after official data showed that record exports had pushed Germany’s trade surplus to a three-year high in September, indicating the country was bearing up fairly well in the eurozone debt crisis.

Germany, the world’s number two exporter after China, exported goods worth a total €91.3 billion ($124.9 billion) in September, 0.9 percent more than in August and the highest level since unification.

The BGA represents Germany’s exporters, mainly small- and medium-sized firms. Börner said that for those companies, “the amount exported to eurozone countries does not depend on the euro itself but on the free market and the absence of customs duties.”

Börner’s remarks stood in stark contrast to the line taken by German Chancellor Angela Merkel and other political leaders, who argue that “everything must be done” to protect the eurozone from falling apart.

Consultancy group McKinsey said in a recent study that two-thirds of the economic growth in Germany in the last decade could be put down to the introduction of the euro.

“An Italy which fails in the euro is just as disastrous as an Italy that fails outside of the euro,” Börner said, voicing scepticism at Rome’s ability to implement needed economic and fiscal reforms.

France also faces “a big problem of growth and productivity,” he added.

But he said that while the end of the euro would certainly pose a competitiveness problem for German companies, “with a reasonable monetary policy, and by agreeing with the unions,” they could be overcome.

“A good entrepreneur must think of a Plan B,” Börner said, stressing he did not want to see an end to the single currency.

But, if the euro did fail, Germany would probably join a bloc of other northern European countries with similar economic profiles such as Austria, Finland, the Netherlands and Denmark, he said.

AFP/mdm

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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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