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ANGELA MERKEL

Germans don’t trust Greece to tighten belt

Two thirds of Germans voiced doubt in a poll published Friday that heavily-indebted Greece is serious in its commitment to pare down its spending in order to receive a bailout and avoid bankruptcy.

Germans don't trust Greece to tighten belt
Photo: DPA

Some 27 percent said they believed serious efforts would be made to implement austerity measures hammered out by rival Greek politicians, while 66 percent were sceptical, according to the poll for ZDF public television.

Nearly half of those asked said other eurozone countries should accept that Greece faced bankruptcy without further aid, while 62 percent expect that if that happens, the German economy will suffer as a result, it showed.

Eurozone finance ministers, unconvinced by the austerity package, have given Athens until next Wednesday to meet further conditions in return for €130 billion ($171 billion) in aid.

German Chancellor Angela Merkel also got an overwhelming thumbs-up for her handling of the eurozone’s debt crisis, with 69 percent judging her performance as basically good, the poll showed.

An earlier poll released Wednesday by the Forsa polling institute for Stern magazine revealed Merkel’s conservative Christian Democrats were at their most popular since winning a second term in 2009.

The survey on Greece was conducted by polling institute “Forschungsgruppe Wahlen” for ZDF between February 7 and 9 among 1,272 people.

German lawmakers will vote at the end of the month on the new multi-billion-euro rescue deal planned for Greece, a leading member of Merkel’s party said Friday.

“The Bundestag (lower house of parliament) will vote on Monday, February 27 on how the path now for Greece and the support proceeds,” said Volker Kauder, who heads the Christian Democrats’ parliamentary group.

“Our goal remains to help Greece but Greece must also keep its promises,” Kauder said.

Merkel met the heads of all the parliamentary parties early Friday to report back on efforts to agree a second bailout to save Athens from bankruptcy although a concrete deal has yet to emerge.

Merkel won two key votes on the eurozone debt crisis in parliament last year.

Frank-Walter Steinmeier, head of the Social Democrats parliamentary group, said: “It’s in nobody’s interest to refuse what is now necessary in Greece to prevent total collapse.”

AFP/bk

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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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