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Germany: Ten euro bread soon?

2022-09-17 15:39:29Kosova&Bota SHKRUAR NGA SABINE KINKARTZ
Germany: Ten euro bread soon?
Germany: Soon ten euro bread

A lot of money for gas and electricity, this is nothing new for bakers. Current energy prices for many sectors are becoming unaffordable.

Bread, panini, cakes and cookies - "We are a classic bakery and patisserie company, where we sell what is baked in the ovens behind the counters", Tobias Plaz appreciates his venture in Eutingen, a village in the south of Germany near Stuttgart. This family business, now managed by the fourth generation, has been established since 1890. Last year we completely reconstructed the shop, through a new window customers can see from the counter what is being baked in the back of the shop.

But right now Tobias Plaz doesn't know how to manage his business any more. At the end of August he received a notice in the mail from the gas supplier. Instead of the ten cents he has paid so far per kw/h for gas, he will now have to pay almost 35 cents. "We want to share this information with you, so that you can understand when we will have to adjust the prices for our products," the baker wrote on Facebook and Instagram, where he placed a picture of the notice from the gas supplier for the new prices.

Germany: Ten euro bread soon?

Bakers protest in Hanover

Even in other baking enterprises in Germany, during these days, requests with new prices from energy suppliers are arriving. With such prices, entrepreneurs are stunned and wondering how they will meet these costs. Eckehard Vatter, who has a bakery company with 35 subsidiaries and 430 employees in Lower Saxony, will have to pay more than 75,000 euros a month for gas in the future. So far he has paid around 5,800 euros.

In Hanover, Vatter and many of his colleagues took to the streets in protest. "Save the bakers" was written on their placards and banners, which kept about 1,000 protesting bakers and their employees on the road. In many places for days the sale is being held in the dark to attract the attention of customers. "We are going out of the light - today light and oven tomorrow?", this is their motto.

A panini for five euros

Without energy the ovens cannot work, but how can the bakers get the high costs? Increase the price of bread and panini respectively? A panini for five euros and a loaf of bread for ten euros? The customers would not be able to afford it, the bakers are sure of that. The central association of the German baker's craft warns that many enterprises will be forced to give up business if they do not receive financial aid from the state.

The government's aid packages have so far mainly focused on family budgets and not so much on enterprises. 95 billion euros are planned to make the exploding energy prices affordable for citizens. But it took time until the governing coalition of social democrats, ecologists and liberals understood that even businesses cannot survive this crisis without support.

Who should pay the high prices?

"Every day we receive emergency calls from utilities, which are on the verge of shutting down production - also because they no longer compensate for extremely high energy prices by passing this price burden on to customers," warns Hans Peter Wollseifer, president of the association center of craftsmanship, in an interview with the "Rheinischen Post" newspaper. The dynamics of bankruptcies are much worse than at the peak of the coronavirus pandemic. According to a survey by the German industry association (BDI), one third of industrial enterprises consider that their existence is threatened.

On the plaque in black letters on a yellow background it is written: Our light is going out. Bread alert. Our politicians are pushing the baker's craft into the greatest crisis of all time! Demonstrators can be seen in the background.

Germany: Ten euro bread soon?
On the plaque in black letters on a yellow background it is written: Our light is going out. Bread alert. Our politicians are pushing the baker's craft into the greatest crisis of all time! Demonstrators can be seen in the background.

There are more and more examples of crisis every day. Toilet paper maker Hakle filed for bankruptcy, arguing that rising costs could not be offset by higher retail prices. The steel concern Arcelor Mittal has stopped production at two subsidiaries in the North of Germany and has taken out the staff of employees on the minimum wage system. The state unemployment insurance agency has now paid off their wages.

Germany is threatened with falling into recession

If an enterprise stops production, this often has significant consequences for other branches of the economy as well as for consumers.

Economic researchers and representatives of the economy themselves calculate that Germany is on the path to recession similar to the losses caused by the coronavirus pandemic. On the day of entrepreneurs in Germany, the Minister of Economy, Robert Habeck, promised financial aid, but he had to admit that there is still no agreement within the ranks of the government on their concrete volume.

Minister Habeck cannot say the exact figure of how much these financial aids will cost the taxpayers. But one thing is clear, that not only industrial enterprises, which are in international competition, will benefit, but also medium-sized enterprises, mainly those that use energy intensively. So also the bakers. The government will decide on the aid program in the coming weeks, Habeck said in Berlin. But the aid should have a retroactive effect, i.e. starting from September. "We must now provide all the financial strength that is necessary to ensure the good substance of the economy and jobs in the country," Habeck said after the meeting with 40 economic associations of medium-sized enterprises.

No permanent subsidies

The financial aid will be paid for a limited time, until the national and international efforts at the European level to soften the energy and gas prices give the proper effect, Habeck declared. But will this be enough? Steffen Müller, professor at the Leibniz Institute for Economic Studies in Halle draws attention, that the increase in the price of energy, as well as the increase in interest rates are not a temporary phenomenon, but they can remain in the medium or long term.

"The aid programs, which are aimed at coping with a certain period of crisis, postpone the problems in this situation to a few months in the future, a burden that falls mainly on the taxpayers", writes Müller in response to DW's question: "The measures , which for a period reduce the price of energy, are also not reasonable, because they weaken the zeal for energy saving. This is exactly what we should not allow ourselves."

The crisis accelerates the structural turn

More reasonable are the soft loans, Müller argues, that should be granted on the condition of adapting energy-saving production. "The essence of this argument is that, even after this winter, the price of energy will not return to last year's level. So something changes in the structure."

Normally, it is the duty of the enterprise to be prepared for such developments, writes the expert. In a "structural turn accelerated by the crisis towards a greener industry", the state can help by accompanying enterprises on this path./ DW

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