Read news from:
Austria
SHARE
COPY LINK

ECONOMY

Quelle gets €50 million in emergency loans

Insolvent German mail-order company Quelle got a massive credit injection of €50 million on Monday night after more than four hours of negotiations, government officials said.

Published: 30 June 2009 08:02 CEST
Quelle gets €50 million in emergency loans
Photo: DPA

The states of Bavaria and Saxony, where Quelle conducts business, as well as banks and government officials, worked with the ailing company to secure a loan by December 31, 2009, Bavarian Finance Minister Georg Fahrenschon said after the meeting.

The emergency aid deal for the company, which is 80 years old and employs some 8,000 workers in central and Eastern Europe, is still pending approval by the EU Commission on Tuesday, he added.

Saxony Economy Minister Thomas Jurk explained that the federal government had agreed to contribute €25 million, Bavaria would pony up €20.5 million, and Saxony a smaller sum of €4.5 million.

German Economy Minister Karl-Theodor zu Guttenberg told broadcaster ZDF on Tuesday morning that the loans will give Quelle a fair chance to recover.

“We have to deal with taxpayer money responsibly,” he said.

Insolvency administrator Klaus Hubert Görg told the media he was relieved that a deal had been reached, but warned that the situation was still tenuous.

“We must not think that it’s a sure-fire solution,” he said.

Quelle, owned by insolvent tourism and retail group Arcandor, needs the loan to finance their new winter catalogue and ease debts.

The two companies practice a form of treasury called cash pooling, and much of Quelle’s liquidity had been filched by Arcandor recently.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

Published: 30 May 2023 15:46 CEST
How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

SHOW COMMENTS