German business meltdown over gas price chaos – ‘veritable economic crisis’ looms

Brit stuck in two-hour queue for supermarket due to petrol chaos

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Small and medium-sized companies (SMEs) within Germany have gone into meltdown due to the rising cost of both diesel and petrol. At present diesel has reached a record high price, while premium gasoline is also approaching its all-time high, impacting motorists nationwide.

As a result of the increase, the SME Association is now calling for petroleum taxes to be reduced and the commuter allowance to be increased.

The SMEs have issued a warning to trade unions that due to the record-high costs, there could be drastic consequences for both the economy and consumers.

The claim that by the end of 2021, the COVID-19 pandemic will be replaced by a crisis of a different type.

Hans-Jürgen Völz, chief economist of the Federal Association of Medium-Sized Enterprises (BVMW), issued the warning to the newspapers of the Funke media group.

He said the coronavirus crisis “threatens to be seamlessly replaced by a veritable economic crisis, while other European countries are recovering economically around us”.

He also explained the damaging impacts that the stark rise in fuel prices has caused on regions in Germany including the impact on employment.

He said: “The explosion in fuel prices is putting a massive strain on the economy, endangering jobs, growth and prosperity.”

The growth in fuel prices will have a knock on effect on the cost of transport, heating and materials.

The economist also warns unions could enforce higher collective bargaining agreements, as the increase could see people calling for higher wages to offset the cost.

He said: “It is already evident that the additional costs for transport, heating and materials passed on to consumers with a time lag will lead to higher wage demands.

“In any case, the wage-price spiral is already in motion.”

Mr Völz called for measures to aid those impacted by the surge, by saying: “From the perspective of medium-sized companies, the mineral oil tax should be temporarily reduced and the commuter allowance noticeably increased.”

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It comes after the price of diesel rose to an all-time high on Sunday, with motorists paying a nationwide average of 1.555 euros per litre, according to the ADAC (General German Automobile Club).

While drivers had to pay more than ever for diesel, petrol also became more expensive as the cost rose sharply.

A large quantity of the price of fuel is made up of taxes and duties including the energy or mineral oil tax – mentioned by Mr Völz – which amounts to 65.45 cents per litre for premium petrol and 47.07 cents for diesel.

VAT also forms part of the equation.

There are two decisive factors that can have a knock on effect on fuel prices – both the price of crude oil and the exchange rate of the dollar and euro can impact the cost motorists are forced to pay.

At present, the price of crude oil is currently lower than it was in 2012, while the dollar is significantly stronger than it was nine years ago.

As a result, oil imports to Europe are more expensive.

Furthermore, the CO2 tax introduced at the beginning of the year also plays a role, and the rising demand for heating oil as temperatures drop can also cause the price to surge.

Additional reporting by Monika Pallenberg

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