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ECONOMY

Deutsche Bank reject €800 million settlement

The decade long conflict between the Leo Kirch media empire and Deutsche Bank may go to court, after the bank rejected an €800 million offer from Kirch’s heirs to settle the dispute privately.

Deutsche Bank reject €800 million settlement
Photo: DPA

The news contradicts German press reports from three weeks ago that said the bank’s offer of €800 million was to be accepted.

The bank’s management board unanimously rejected the payment at a meeting on Thursday.

The decision was made following a review of the circumstances as well as internal and external legal advice it received.

Kirch’s media empire extended to, at one point, 40 percent of the huge Axel Springer publishing house, a majority share of the television conglomerate ProSiebenSat.1, rights to the Bundesliga’s football matches, Formula One and two football world cups as well as a range of film holdings.

Kirch, who died last year, sued Deutsche Bank for more than €3 billion, saying the then CEO Ralf Breuer had destroyed him in 2002 when Breuer, in an interview, expressed doubts about the creditworthiness of Kirch’s empire.

Kirch blamed the bank for his empire’s subsequent bankruptcy.

A court suggested that the two sides settle for €775 million, but Deutsche Bank rejected the idea. Kirch’s heirs pursued the dispute and the two sides had reportedly agreed on the €800 million in early February, but that has since fallen through.

The magazine wrote that Kirch’s widow and Deutsche Bank chief Josef Ackermann apparently agreed on the sum at the time, but there was no majority behind this among the board members. Thursday’s vote confirmed that.

The Local/mw

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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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