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ECONOMY

Game against South Korea to cost German economy up to €200 million

Excitement is in the air for football fans nationwide in the run up to the national team’s World Cup game against South Korea on Wednesday. But from an economic point of view, the match will be expensive for the country.

Game against South Korea to cost German economy up to €200 million
Economists say it's actually not all that bad if colleagues watch World Cup matches together. Photo: DPA

The reason the match could hit the economy so hard is that it kicks off before usual working hours come to an end – at 4pm.

Accordingly, the decisive football game which Die Mannschaft may need to win in order to reach the final 16 in the tournament is estimated to cost the German economy between €130 and €200 million.

Around 30 percent of employees are still working around 4pm, said economists at the Institut der deutschen Wirtschaft (IW) according to German press group Funke Mediengruppe.

If one in two of these employees watches the game and on average one labour hour without subsequent work is lost, the economy will incur costs of up to €200 million, IW economists said.

There is a flipside, though. If colleagues watch the match together in the workplace, this could also strengthen cohesion among them and thus have a positive effect on productivity.

“It's not always about money, but also about team-building – and there's certainly nothing better than watching an exciting football match together with your colleagues,” said IW labour market expert Christoph Schröder.

“Let's just hope the German team wins,” he added.

SEE ALSO: Fifa opens case against Germany staff accused of 'rubbing it in Sweden's faces'

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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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