News from Germany: Fear of recession in EU’s biggest economy as Putin steps up pressure | Politics | News


Russia’s war against Ukraine and the relentless price hikes have triggered deep insecurity. Germans want to reduce things that are important to them. According to a survey, more than half of Germans (54%) fear that they will no longer be able to maintain their current standard of living because of rising prices.

This is revealed by a survey by the Institute for Trade Research in Cologne.

About two-thirds of respondents said they would cut spending due to inflation.

According to the survey, consumers want to save money by using special offers more frequently and comparing prices more closely.

One in two people also wants to reduce their summer holidays. Four out of five respondents assume that the current price increase for many products is just the beginning.

Nearly 40% said they had postponed shopping since the start of the war in Ukraine.

These were mainly larger investments in housing and furnishings. But according to the survey, many people are also holding back on their new fashion and electronics purchases.

It comes as President Putin refused payment from a German utility company on April 28, raising fears that the EU’s biggest economy could be next on his list of countries to be cut off from supply in gas.

Germany’s economy ministry said the payment was only for a “marginal volume of gas of around 0.2% of Russian import volumes to Europe”.

But German Chancellor Olaf Scholz has said his government is preparing for the possibility that Russia will stop gas exports because he can only speculate on what the Kremlin decides to do.

Speaking in Japan, he said: “You have to be prepared for it and, as I said, we started this before the war broke out and we know what we have to do.”

The European Commission has warned buyers of Russian gas they could breach sanctions if they convert gas payments to rubles, as officials seek to clarify the EU’s position on Moscow’s payment system , which caused confusion in the block.

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Russian gas giant Gazprom cut off deliveries to Poland and Bulgaria on Wednesday (April 27th) after refusing to pay for gas in roubles, marking Moscow’s toughest response to Western sanctions over the conflict in Ukraine.

Bulgaria and Poland had already said they would not renew contracts with Gazprom after they expire at the end of this year and said they could source supplies from other sources.

The escalation follows an executive order issued by President Putin last month requiring countries Moscow deems “unfriendly” to pay for gas in rubles under a new payment system.

Under this mechanism, buyers are obliged to deposit euros or dollars in an account at Gazprombank, which must then convert them into rubles, place the proceeds in another account belonging to the foreign buyer and transfer the payment to Russian currency to Gazprom.

European Union energy ministers will meet on Monday May 2 to discuss the situation, which has left member states divided over whether sanctions would be broken if they used the Russian mechanism.

Speaking at a briefing on Thursday April 28, a senior EU official said if EU buyers declare their gas payments complete once payment is made in euros and before it is be converted into rubles, the sanctions would have been respected.

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The difficulty for European buyers is that the decree requires buyers to also open a ruble account at Gazprombank into which their payments in euros or dollars would be deposited after conversion into Russian currency.

The Russian decree would only consider payment complete after the gas was converted into rubles – a transaction that would involve Russia’s central bank, which is subject to EU sanctions.

“What we cannot accept is that companies are forced to open a second account and that between the first and the second account, the amount in euros is in the hands of the Russian authorities and the Central Bank Russian, and the payment is not complete when converted into rubles,” the senior EU official said.

“It is [an] absolutely clear circumvention of the sanctions.”

Opening a ruble account at Gazprombank itself may violate EU sanctions, the official added, without providing a conclusive assessment.

Thursday’s clarifications followed a request on Wednesday from EU countries’ ambassadors for clearer advice on the matter.

Additional reporting by Monika Pallenberg


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