Hello dear readers,
If you drive past petrol stations more often these days, or if you are renovating a house (like I am right now) or if you are responsible for purchasing raw materials in a company, then you will not be surprised: In March, inflation in the euro area once again rose more sharply than experts had feared to 7.5 percent – higher than at any time since the start of monetary union. In Germany, too, consumer prices climbed by 7.3 percent – more than they have in 40 years.
This puts enormous pressure on the ECB. It is becoming increasingly clear that inflation will fall at a slower rate later in the year than central bankers have been urging. They now face a dilemma. If they raise interest rates, they put a strain on the already weakened economy. The prospects are already as gloomy as the current April weather: the economic experts have just had to more than halve their growth forecast for the German economy for 2022 to 1.8 percent. If the ECB leaves interest rates low, they could solidify inflation expectations and accelerated inflation will become the new normal.
A key driver of inflation is the uncertainty on the energy markets. It is increasing every hour, as the Handelsblatt energy team reports almost around the clock: Vladimir Putin is now demanding payment for gas deliveries in rubles, but still wants to allow euro payments via a complicated structure. Confusion surrounding the decision stirred markets this week. Economics Minister Robert Habeck had to activate the gas emergency plan. Companies are therefore already preparing for a gas delivery stop, as our corporate department has researched. The textile discounter Kik, for example, has already proactively reduced the temperatures in its stores.
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Then the next blow at the end of the week. The Berlin office of the Handelsblatt learned that scenarios are being played out in the Ministry of Economics, according to which the German subsidiaries of Russian energy companies could be nationalized if necessary, should Gazprom Germania and Rosneft Germany get into difficulties. In fact, they are increasingly having problems working with banks and other business partners – even though they are not affected by the sanctions.
History shows the whole absurdity of the situation: In order to secure the energy supply in Germany, the state may have to save parts of the Russian energy industry. Less than 24 hours later, the fears came true: Gazprom announced that it would give up its German subsidiary and its holdings. What will happen next will have to be clarified in intensive negotiations behind the scenes in Berlin over the next few hours. Also the question of what all this means for the energy supply.
What else kept us busy this week:
1. Uncertainty is increasingly becoming a problem for the German economy. Analysts have drastically revised their profit expectations for the largest listed companies downwards, my colleague Ulf Sommer analyzes. Henkel, Jungheinrich and Lufthansa are particularly affected. There hasn’t been this much uncertainty about corporate profits in years.
US delegation in the Handelsblatt editorial office
2. When a number of employees of US senators visited our editorial office at the beginning of the week, they had one question in particular: how did this enormous dependence on Russia come about?
Politicians all over the world are asking themselves this question these days, as reported by Handelsblatt correspondents. And they report bewilderment about German energy policy in recent years. Berlin had been warned not to make itself dependent on despotic regimes, said US Nobel Prize winner Paul Krugman recently. But Berlin didn’t want to hear it.
Politicians and scientists all over the world are amazed at the way Germany has become dependent on Russia for energy.
(Photo: ZB)
3. The virtual summit of the EU leaders with China’s head of state Xi Jinping yesterday was also marked by the war. Above all, one thing became clear: the relations between the two economic powers are facing a crucial test. Unlike the Americans, the Europeans are not openly threatening China with sanctions. But they show that even a break in the economic relationship with Beijing cannot be ruled out should Beijing support Moscow economically or even militarily. “After this war, nothing will be the same as before,” said commission chief Ursula von der Leyen.
4. The US economist and futurologist Jeremy Rifkin sees the Ukraine war as the beginning of a major transformation. “This will be the last fossil fuel war,” he said in an interview with our New York office manager Katharina Kort. He sees the world on the cusp of a third industrial revolution that should make a much more digital, greener world possible. And Europe, according to the economist, could play a pioneering role here.
5. While Robert Habeck is growing in this crisis and is becoming the central crisis explainer for the federal government, little is heard from Chancellor Olaf Scholz. A few weeks ago, Scholz spoke of a “turning point in time”. For a chancellor who has made sobriety his trademark, “it was almost a rhetorical outburst,” writes opinion leader Jens Münchrath. “But since then, the chancellor has put the citizens back on an emotional dried fruit diet.”
While his ministers try to explain their actions everywhere, Scholz is rather quiet.
(Photo: dpa)
6. Nothing has yet been heard from Angela Merkel in the whole matter. I was all the more excited to talk to her former business advisor Lars-Hendrik Röller. In his first big interview after the end of the grand coalition, he talks about Nord Stream 2, the lack of LNG terminals and a possible energy embargo. According to Röller, the war in Ukraine will lead to a reorganization of the world economy.
7. Sometimes the big revolutions are almost invisible, not much bigger than a fingernail: In the automotive industry, computer chips are becoming an all-important component. Without them, there would be no on-board electronics and no self-driving cars. The problem: The semiconductors don’t come from Wolfsburg, Ingolstadt or Stuttgart. But from American chip manufacturers such as Intel, Nvidia and Qualcomm. And with that begins a dangerous dependency that pays the German auto industry billions, according to the Handelsblatt auto team.
8th. In the Wirecard case, the public prosecutor’s office searched 40 apartments and business premises, questioned suspects and witnesses in 450 interrogations, collected 42 terabytes of data – and archived all of this in 700 files: now the indictment has been filed. And that is largely based on the statements of the highly dubious ex-manager Oliver Bellenhaus, who the Handelsblatt investigative team portrayed in a highly readable report. It describes how the man ticks, how he became the driver – and ultimately the driven – of the Wirecard affair. Although Bellenhaus didn’t answer any of our questions, friends, colleagues and business partners spoke to our reporters.
9. The German software company SAP turned 50 yesterday – so it was high time to invite the company’s CEO to my podcast Handelsblatt Disrupt. I spoke to Christian Klein for almost an hour about the difficult transformation of SAP, the consequences of the war in Ukraine, the founders of the group – and about his path from a student internship to the top of SAP: At 39, Klein was the youngest CEO in the Dax.
I wish you a relaxing weekend – despite the bleak prospects.
It greets you cordially
Yours Sebastian Matthes
Editor-in-Chief of the Handelsblatt
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