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Berlin’s economy sees economic activity and jobs threatened by war

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Times for the economy will likely be tougher than expected. All the forecasts that predicted a rebound for 2022 once the corona pandemic has subsided are now just waste.

The Association of Business Associations of Berlin and Brandenburg (UVB) sees extreme effects in the capital region as a result of Russia’s war of aggression in Ukraine: companies would have to be prepared for considerable losses, which also threaten jobs .

That’s what UVB’s general manager, Christian Amsinck, said on Wednesday. Instead of the usual annual perspective, he presented a survey of the Association of the Metal and Electrical Industry (M+E) in Berlin and Brandenburg. It is the largest industrial association member of the UVB.

According to business associations, the industry is much more affected by the current situation than during the pandemic. 72 percent, almost three out of four metallurgical companies in the region, have relationships with clients in Russia, Belarus or Ukraine.

“So you export there or produce there. In the national M&E industry, only one in two companies has such close ties to the region in crisis.” 53 percent of the M&E companies in Berlin and Brandenburg also source from these three countries.

Many companies expect production to fall

More than half of them said it was difficult or impossible to replace these imports, Amsinck said. Ties with Russia, Ukraine and Belarus are closer in the region than in the rest of the republic.

Therefore, metal entrepreneurs expected trouble for their business. Four out of ten companies surveyed expect production to fall. Almost 60 percent expect a drop in sales and almost every second they fear a drop in profits.

The head of the association also gave examples of different industries being affected: in addition to M&E companies, automotive suppliers have also come under pressure, as has the food industry, which depends on wheat. An example: preliminary products for the production of frozen pizzas.

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Almost all sectors in the region suffered from the huge increase in energy and raw material prices: in addition to the metal and electrical industry, there were also bakeries and confectioneries, roofers and carpenters, hospitality and logistics.

But how can the economy be relieved and, therefore, the final consumer? The business associations ask for quick action, in reference to the reduction of the prices of energy and industrial electricity.

“High energy prices are a threat to our location. A massive reduction in taxes and related tariffs would help secure investments and jobs,” says Amsinck. This should apply until the end of 2022.

How diesel could get cheaper

In concrete terms, this means: The UVB wants the energy tax on diesel, natural gas and heating oil to be reduced to the minimum level across the EU. The price of state CO2 certificates should be reduced to zero, the electricity tax to almost zero.

Based on Amsinck’s sample calculation, diesel could be reduced by a good 33 cents per litre. Natural gas would be nine euros cheaper per megawatt hour, heating oil eleven cents per liter and electricity two cents per kilowatt hour.

“Diesel in particular is of great importance to the processing industry,” Amsinck emphasized. The economy rejects an embargo on Russian energy. In his opinion, this would have unforeseeable consequences for our industry, for employment and for private households.

But business associations go further. They are critical of the planned abandonment of coal and nuclear power plants. “The Russian attack made it clear to us how important security of supply and competitive prices are.”

Before turning off a combined heat and power unit, you should check to see if the power supply is still safe. “You have to adapt to the new realities now” and not stick to the coalition agreement.

Amsinck referred to blocks E and F of the Jänschwalde power plant in Brandenburg; under current law, they will finally close in October 2022 and October 2023. “Politicians should take a hard look at staying in the safety reserve for a longer period of time,” Amsinck said, adding, “If you shut down lignite, 5,000 to 6,000 new wind turbines would have to be built, I wonder: where should they all be?
But according to the old tradition, the head of the UVB also criticized the Berlin Senate in the annual perspective. He praised the restart program, which aims to revive Berlin businesses that have been hit hard by the pandemic.

But he cannot understand why only those companies should be supported, only those companies that pay the minimum wage of 13 euros in the near future. “Companies entered into crisis through no fault of their own as a result of the corona measures taken by the federal and state governments. It is unacceptable that Berlin punishes them a second time by withholding aid.”

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