Anneliese Kleinschmidt was gearing up for a brisk Christmas season, but now stands in a sea of roses, lilies and chrysanthemums that will perish if she can’t sell them by the end of Tuesday.
Her Blumenparadies flower shop in Berlin has already lost at least 30 per cent in revenue this year because of the coronavirus pandemic. Now, Germany’s decision to shutter most retailers from Wednesday as part of a hard lockdown means her store is one of thousands in Europe’s biggest economy that will be deprived of the lucrative holiday shopping period — which in Germany traditionally includes pots of clover for good luck.
Germany’s latest curbs are set to hit output hard just as it started to recover from the first lockdown in the spring. Economists are already slashing forecasts, with Commerzbank now seeing a fourth-quarter drop of 1 per cent compared with the third quarter and Berenberg Bank predicting a contraction of 1.8 per cent.“Having to close over Christmas and New Year’s is very tough,” said Kleinschmidt, who has been running the store in the Kreuzberg district since the 1970s. “This lockdown comes as a total shock after an already difficult year.”
Germany is shuttering non-essential retailers until at least Jan. 10 and encouraging schools to extend holiday breaks. Companies from engineering giant Siemens AG to carmaker Volkswagen AG were asked to check whether they can close sites or have employees work from home.
Chancellor Angela Merkel hammered out the tighter curbs with state leaders on Sunday after a looser shutdown failed to halt a surge in infections and deaths. The decision gave affected business little opportunity to prepare.
The abrupt lockdown may hurt sectors beyond retail, such as automobile sales — a key part of the German economy — because customers won’t be able to benefit from a tax incentive that expires at the end of the year, said Claus Michelsen, an economist at the DIW thinktank.
“A lot of areas where we would have expected a strong year-end sales push will now be a lot weaker,” he said. “The economic impact is likely to persist well into the first quarter.”
The first lockdown, which hit second-quarter activity, caused the biggest contraction in the German economy in at least half a century. At the time, companies from BMW AG to Thyssenkrupp AG shuttered factories, and hundreds of thousands of workers were sent home on state-funded wage support. Deutsche Lufthansa AG avoided bankruptcy only thanks to a 9 billion-euro bailout — among the largest in Europe.
Even so, the country is likely to suffer less than other European neighbors such as France, Italy and Spain, who have a greater reliance on services and tourism. Germany has benefited from its strong industrial focus during the crisis as factories adapted to health and safety rules.
In a bid to soften the blow to its economy, Germany is providing about 30 billion euros (US$36 billion) in emergency relief for businesses in November and December. A less-generous program that compensates for fixed expenses such as heating and rent has been expanded and extended until the end of June. The federal government estimates the hard lockdown will cost it around 11 billion euros a month.
Despite those safety nets, the curbs could knock consumer and business confidence at a critical time of the year, especially for Germany’s 620 billion-euro retail, hospitality and personal-services sector.
Amid the latest lockdown, more than half of inner-city shop owners — which risk losing out to online retailers like Amazon.com Inc. and Zalando SE — fear for the existence of their businesses, according to German retail lobby HDE. As many as 250,000 jobs are under threat if retailers don’t get additional financial aid, the group said.
After comfortably handling the initial wave of the pandemic, Germany is now lagging behind many of its neighbors. New cases and fatalities rose by record amounts in recent days, and more than 22,000 have died from the disease, which has infected a total of 1.35 million people in the country.
The latest numbers show that imposing a painful lockdown early is better than a series of softer stop-and-go measures, said Christian Odendahl, the Berlin-based chief economist of the Center for European Reform.
“Containing the virus effectively and in a timely fashion is what’s best for the economy in the medium run,” he said.
Riccardo Re, who runs an Italian restaurant in Kelsterbach near Frankfurt, said the government should have implementd a lockdown earlier to protect the key Christmas period and go after those businesses who caused outbreaks by breaking the rules.
In the past months, Re has reduced the number of tables and invested more than 3,000 euros in disinfectant dispensers, to-go boxes and takeout porcelain. Still, this year has been the most difficult in his 27 years as a restaurateur, he said.
“The government must also think about what’s next,” he said. “We need a perspective.”
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
