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ECONOMY

Fear of inflation grows as faith in euro falls

Fear of inflation is growing in Germany as people lose their faith in the euro, with a third of those questioned for an opinion poll having little or no trust in the currency and nearly half are worried about where to put their savings.

Published: 8 December 2011 12:35 CET
Fear of inflation grows as faith in euro falls
Photo: DPA

The share of Germans scared of inflation has risen from 37 percent this spring to 46 percent in November, according to the survey conducted by the TNS research institute for Allianz Bank.

And 45 percent of the more than 2,000 people asked for the poll, said they were no longer sure what to do with their savings.

While shares and funds continued to lose popularity, property and pensions were more favoured, while just over half those asked said they still had money in savings accounts.

Around a third of respondents said they had no or little confidence in the stability of the euro, while a third said they still trusted it and another third had some faith left in the currency.

The poll comes on the eve of a crucial meeting of European leaders desperate to work out how to tackle the continent’s sovereign debt crisis, which threatens to sink the euro and do deep damage to economies.

Although 42 percent of those asked said they were content with their savings, only a third said they were happy with their net income. Just 23 percent believed they would see an income increase in the coming two years while 20 percent expected to be worse off.

Two thirds of Germans said saving money was very important, but most said they were not able to sock away as much as they wanted. A full 11 percent said they were unable to save anything.

The Local/DPA/mdm

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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.” 

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