Berlin wants to avert bankruptcies
The federal government is working on a protective shield for Russia
03/11/2022, 1:09 p.m
According to newspaper information, the federal government is working “under high pressure” on new economic aid. They are intended to financially cushion the consequences of the Ukraine war and the increased energy prices for German companies. A rescue package, such as that set up during the corona crisis, should also be considered.
In order to prevent bankruptcies, the federal government wants to support companies hit by the Ukraine crisis. As the “Handelsblatt” reports, among other things, a Russia protective shield is to be set up, similar to the one set up for the corona crisis. In addition, work is being done on a separate protective shield for the energy industry, as several government officials confirmed to the newspaper.
In order to get an idea of the difficult situation, Federal Economics Minister Robert Habeck (Greens) and Federal Finance Minister Christian Lindner (FDP) are said to have had a lot of discussions with group leaders and business representatives this week. The plans have not yet been finalized, it is said, but they are working “under high pressure” on the implementation. The plans would have to be coordinated between the finance and economic ministries. The federal government is also examining instruments such as compensation payments or direct aid.
The situation is “serious”. A government representative is quoted as saying that parts of the economy could face tough months if supply bottlenecks worsen, energy prices continue to rise or all energy imports from Russia are stopped.
How exactly the protective shield for those affected by the Russia-Ukraine crisis can be designed also depends on the EU Commission’s state aid framework. The Commission is said to have already sent out a first proposal to facilitate state aid on Thursday. The Member States must now consider what is possible under these conditions.
Expensive energy burdens the majority of German companies
After the outbreak of war in Ukraine on February 24, gas and oil prices climbed to new record highs. Three out of five German companies therefore expect large to very large burdens, according to a survey by the employer-related Institute of the German Economy (IW Köln), which surveyed a good 200 industrial companies and industry-related service providers in the first week of the war.
In industrial companies, due to the energy-intensive manufacturing processes, a good 70 percent anticipate a weakening as a result of the higher production costs. Gas supply failures are a problem for almost a third of the companies. Here, too, the concerns in the industry are particularly great: 37 percent see a lack of gas supplies as a major or even very major supply shock.
The fact that suppliers are absent or unable to deliver because of the war also represents a burden for almost every third company: A good 30 percent rate the failure of deliveries of other inputs for their production as problematic. Among industrial companies, it is even almost 40 percent, given the value chains that are more strongly positioned internationally.
In the past few days, the economy had been calling louder and louder for help from the state. In particular, an imminent halt to Russian energy imports is causing concern for the economy.