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ENERGY

Mild winter benefits energy consumers

Sunshine and more cash in their pockets: this year's mild winter has saved German households hundreds of euros on their heating bills, a consumer report concluded on Friday.

Mild winter benefits energy consumers
Photo: DPA

As the fourth warmest winter since 1881 drew to a close this week, consumers were not only basking in unseasonal sunshine, but also in big savings on their energy bills.

Unusual levels of sunshine and above-average temperatures over the past months have given energy customers less call to crank up the thermostats, bringing an annual average saving of over €100 in heating costs per household.

The mild weather alone has delivered an on average 11 percent saving on consumers' heating bills this year, according to the energy experts at the North Rhine-Westphalia consumer advice centre.

Energy customers have made further savings from this year's drop in oil and gas prices, partly due to the shale gas boom in the United States, the centre said.

Meanwhile, with consumers having more cash to spend, economic forecasters said 2014 was looking better than expected.

The German government's economic advisors, known as the Five Wise Men, upgraded their forecast for economic growth this year on Thursday after an unexpectedly good start to 2014.

Positive growth impulses would come mainly from domestic demand, with both consumer spending and investment in equipment likely to pick up, the panel predicted.

But a good year for consumers has been a bad one for the German energy industry, which has suffered losses because of the warm winter.

A spokesman for German energy giant RWE said gas sales had dropped by ten percent since October last year, when the frost and wintry weather dragged on past Easter into April. "The mild winter will pay off for [gas] customers," said the spokesman.  

Energy supplier Eon, which is also facing losses, also agreed its customers had made savings percent because of the warmer weather.

"A family of three has saved around €150 in heating costs due to the mild weather," said Uwe Kolks, head of Eon Germany.

The lack of snow means Germany's salt producers are also feeling the pinch – Kassel-based producers K+S said it had seen "considerable" losses.

Authorities in North Rhine-Westphalia, for example, said their road salt bill was down by 25 percent on last year.

The industry is particularly vulnerable to weather fluctuations, with a mild winter seeing production drop from an average of 2.3 million tonnes of salt to just 1 million tonnes.

On the other hand, a harsh winter can mean authorities scatter up to 4 million tonnes to keep the roads open.

READ MORE: 'Giant marbles' could power our homes

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ECONOMY

German economy rebounds from recession, but growth stays weak

The German economy grew only very slightly between January and March, official figures published Tuesday showed, dodging a recession after a weak end to 2023.

German economy rebounds from recession, but growth stays weak

Output rose by 0.2 percent in the first quarter of 2024 in comparison with the previous three months, federal statistics agency Destatis said in preliminary figures.

By contrast, Europe’s largest economy shrank 0.5 percent in the fourth quarter of 2023, according to a revised figure out from Destatis. That revised figure was worse than its previous estimate that GDP fell by 0.3 percent in the quarter.

The statistics agency however upgraded its estimate for the whole of 2023, suggesting the German economy contracted only 0.2 percent over the year instead of 0.3 percent.

The increase in the first quarter of 2024 reflected an improvement in the construction industry and in exports, Destatis said. Household consumption however fell in the quarter, according to the agency.

The economic mood in Germany has been pessimistic in recent months, as businesses have had to manage increased energy costs, high inflation and rising interest rates. But with the costs for energy coming down and inflation easing, the outlook has improved. The government last week adjusted up its forecasts for 2024, predicting growth of 0.3 percent instead of 0.2 percent.

The first quarter improvement showed “the German economy can still grow after all”, ING bank analyst Carsten Brzeski said. “Optimism has returned to the German economy.” 

The rebound would however be limited by “structural weaknesses”, Brzeski said.

“Higher oil prices as a result of the military conflict between Iran and Israel, as well as the ongoing tensions in the Red Sea, are likely to weigh on industry and exports once again,” he said.

An increasing number of insolvencies could also weaken the labour market, Brzeski warned.

Unemployment in Germany however remained stable, according to figures published by the federal employment agency on Tuesday. The joblessness rate stood at 5.9 percent in April, the BA federal labour agency said.

READ ALSO: Can Germany revive its struggling economy?

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