Germans battle gas prices, sagging economy

Editor’s note–This article is presented because it is a microcosm of the economic ills of the planet. What is happening in Germany is a tiny version of what may lie ahead for the U.S.

German consumers have successfully beaten back a wave of price increases on natural gas. Boycott calls, threats of class-action lawsuits and tough anti-trust laws did the trick.

The price hikes that were implemented toward the close of last year have been rolled back, according to Cartel Office President Ulf Boge.

Federal and state watchdogs have investigated 110 gas suppliers—about one in seven German utilities—on suspicion of abusive price structures. Boge said in most cases, the companies have agreed to delay price rises until June 30, or they have lowered previously announced increases. He said German consumers would realize savings in triple-digit millions as a result.

Last week, about 52 customers filed a class-action lawsuit against Hamburg’s monopoly utility, Eon Hanse, in protest of that utility’s price hikes. More than 10,000 customers followed the boycott, dissuading Eon Hanse from taking any price enforcement action. The utility reportedly has enjoyed a huge increase in profits in recent months.

There were additional economic woes for the Germans in addition to problems with natural gas costs. A survey conducted recently by Delta Lloyd Deutschland, a financial services provider, showed serious troubles with the German economy.

“More than one-third of Germans are worried about slipping below the poverty line,” the report said. Another similar message was being circulated by Angela Merkel, head of Germany’s Christian Democratic Union.

Merkel sounded off about Germany’s 5 million unemployed people and said that likely between 2 million and 3 million Germans were worried about keeping their jobs. “This is the issue that is setting the entire mood in Germany,” she said.

At the same time, the European Commission and a number of German economic institutes cut their predictions for economic growth in Germany this year. Last October, the Commission forecast a growth of 1.5 percent for the country, a one-time powerful economy that is becoming a weakling. Last week, the Commission cut its forecast almost in half to 0.8 percent.

Joaquin Almunia, the Commissioner for Economic and Monetary Affairs, said things could get even worse. He pointed to the threat from rising oil prices and a possible slump in consumer confidence. “But I hope it will turn out better,” he said.

Using the latest forecasts, Germany’s economic growth lags far behind the rest of the European Union. The average growth forecast for the 12 member states using the euro is 1.6 percent for this year. For all 25 EU members, it stands much higher, at 2 percent.

German leaders are considering reducing business taxes in an effort to stimulate employment.


From the April 13-19, 2005, issue

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