German inflation: Soaring costs and shortages push industry to the brink
6 min read
“This has never happened before,” George Gear, the company’s managing director, told CNN Business.
The companies are a key part of the “Metal Stand”, which is part of the 2.6 million small and medium-sized enterprises that account for more than half of Germany’s economic output and about two-thirds of the country’s jobs. Many are family owned and deeply connected to rural communities.
“We have been notified. [of our energy costs] Almost every day, Gear said. “When we get up to go out.”
Europe’s largest economy is particularly weak. According to the International Energy Agency, Germany relied on Russia for about 46% of its natural gas consumption by 2020. That number is likely to decline since the war began, but a sudden disruption to imports from Russia would be “devastating” for manufacturers. Like SimpleCamp, Gear said.
Rising prices.
So far, SampleCamp has not cut production, But passing It increases the cost of eye-watering for consumers, such as copper and cement producers who use its grinding mills, and electric car makers who use its machines. In return, it expects its clients to pass on the costs to customers.
An ice cream maker in Berlin is also feeling the strain.
The Florida Eis is partially protected from high prices – it has converted most of the energy used for production and transmission into renewable energy – but not its suppliers. The company is now paying between 30% and 40% more for its milk.
“The sugar industry needs a lot of energy. If they don’t have more gas, there will be no more raw sugar,” Hoon said. “We cannot buy raw sugar in the world market because of EU regulations.”
“We will have strong cutbacks until the full stop,” he added.
Rising prices have shaken a country that has long been proud of its stable economy, and it still has a deep fear of the hyperinflation of the 1920s and 1930s, about which widespread The Nazi Party is thought to have survived an earlier attempt to oust him following Mr Jiang’s intervention.
Dirk Howe, managing director of SimpleCamp, wonders how long this will last.
“We’re in a kind of dilemma right now,” he told CNN Business.
That benefit has now become a responsibility.
“Natural gas will likely remain expensive after the ban or supply cuts,” Sebastien Dulin, research director at the Macroeconomic Policy Institute, told CNN Business.
He warned that if Russia cut off its gas supplies, Germany’s economy would suffer “structural damage” – a loss that would be more difficult to repair than in the 2008 financial crisis. This could lead to a recession at least as deep and possibly longer than a decade ago.
Fear of ‘Stagflation’
Inflation is just one part of the story.
Germany’s economy is already booming. I The recessionary German Council of Economic Experts, a government advisory group, last month cut its GDP growth rate from 4.6 percent to 1.8 percent in 2022, citing inflation and the war in Ukraine.
Manufacturing output down this month, According to the survey, this is the lowest level since June 2020 S&P Global’s data, and declining confidence could lead to a prolonged downturn.
“Danger [of a recession]”I would say it’s over 50 percent right now,” Dolan said.
‘We have to endure’
The German Association for Small and Medium Enterprises said it had some members. Decreased production due to already shortage.
“[Production cuts are] It’s not The result of power shortages, or high electricity prices, however [because] They don’t have the materials to make the goods, “Hans-Jگنrgen Wells, the association’s chief economist, told CNN Business.
“For example, aluminum, steel and everything [else] Due to sanctions against Russia, its supply is low worldwide at the moment. “
Hoon, in the Florida Ace, sees himself as an optimist, but he can’t even ignore the “dark clouds” that have gathered over the German economy.
“We have to deal,” he said.