Germany hard hit by recession

Press, 11 February 1983, Page 8

Germany hard hit by recession

PA Bonn A record number of West German firms went bankrupt last year because of the recession, high interest rates, and a shortage of investment capital, official figures showed yesterday. The Federal Statistics Office said that the number of company bankruptcies and insolvencies soared to 11,916 last year, 40 per cent above the 1981 level, which was itself a record.

In December last year 1257 firms went under, the highest monthly total in West German history, suggesting that there has been no let-up in the pace of corporate collapse. Most of the firms which failed were small, but 1982 also saw some major West

German companies under threat.

The electronics firm AEGTelefunken, one of the country’s largest employers, called in the receiver in August, and the steelmaker Arbed Saarstahl came near collapse in December before being bailed out by the government.

Only last month, 1983 claimed its first major victim when the entrepreneur, Willy Korf, was forced to put his Korf steel group in the hands of the receiver.

The bankruptcy figures came on top of a record January total of 2.49 million jobless — 10.2 per cent of the workforce — which is likely to rise further before next month’s general election. The centre-right government of Chancellor Helmut

Kohl, which took power in October, blames its Social Democratic predecessors for what it calls 13 years of economic mismanagement.

It has built tax relief into this year’s budget for firms wanting to take over others threatened with failure. There is also a 2.5 billion mark (SNZI4OO million) aid plan for the housebuilding industry, among the worsthit by bankruptcies. The government is forecasting economic growth in 1983 after two years of decline, but the improvement is expected to do no more than

make up the lost ground. Falling interest rates should ease some of the burdens on companies, but most, particularly the smaller concerns, are short of investment capital and rely on outside finance. Exports account for a third of West Germany's Gross National Product, but continued problems with world trade have cast doubt on prospects in this area. Manfred Lennings, chairman of the country’s biggest engineering company, Gutehoffnungshuette, said recently that exports in 1983 would not live up to past hopes.