Business Current economy: Fitch downgrades Italy - economy

Current economy: Fitch downgrades Italy – economy

Here you will find the latest business news in chronological order, with the latest news coming first.

Tuesday, April 28, 10:41 p.m .: The rating agency Fitch has lowered its credit rating for Italy from “BBB” to “BBB-” due to the corona virus pandemic. The outlook is “stable”, the US agency said after the US market closed. The move is the result of the significant impact of the pandemic on the country’s economy and finance. The euro fell against the dollar after the Fitch release.

The rating agency had already announced in February that it was threatened with a downgrade, referring to an extremely high level of public debt and a lack of reforms in the budget, for example.

Tuesday, April 28, 9:30 a.m .: German gross domestic product could collapse by 12.2 percent this quarter. This is the Ifo Institute’s new forecast. The economists base themselves on surveys in April among about 8800 companies from various branches. According to the Ifo forecast, the crisis already started in the first quarter: the German economy should have shrunk by 1.9 percent at the time. Extrapolated over the year, the economists at the Munich research institute expect a minus of 6.6 percent. The biggest drops in April sales were reported by travel agencies and tour operators, the aviation industry and the hospitality industry in the Ifo survey.

The federal government is also calculating an economic slump of a similar magnitude. According to this, the German economy will shrink by 6.3 percent in 2020. Federal Minister of Economics Peter Altmaier (CDU) will present the federal government’s spring forecast this Wednesday. The Federal Statistical Office will present the official estimate for economic performance in the first quarter on May 15th.

For their 2020 forecast, the Ifo economic researchers have assumed that the corona germ can be contained and a second wave of infections avoided. In their model, they also expect a large wave of bankruptcies to fail to materialize, both in Germany and among trading partners. If these assumptions prove to be too optimistic, the crisis is likely to worsen. In order to compensate for the crisis forecast for 2020, the gross domestic product would have to grow by 8.5 percent in 2021, according to the Ifo Institute. Bastian Brinkmann

VW boss calls economic program for the auto industry

Tuesday, April 28, 7:00 a.m .: VW boss Herbert Diess calls for government investments in favor of car manufacturers. “We urgently need an economic stimulus package for the auto industry,” he said in an interview with the “Tagesschau”. Germany is a car country and the car is “probably the best way to boost the economy in this country.” According to this, the main effect is that “an order chain starts as soon as the customer comes into the trading company”. This safeguards jobs at retailers, manufacturers and suppliers.

The VW boss further said that his company “initially does without state aid.” In such a crisis, however, short-time allowance should be allowed. Production at VW should start up again in the coming weeks. There are also promises from Italy that even critical supplies will work.

Other sectors such as gastronomy or tourism may currently be more affected, said VW boss. “But the car has a bigger effect.” Diess is critical of the reduction in VAT in order to stimulate consumption: “This is a relatively expensive measure. The reduction in VAT by one percent costs ten or eleven billion euros.” Reuters

Heil defends planned right to home office

Monday, April 27, 12:45 p.m .: Federal Labor Minister Hubertus Heil has rejected criticism of his plans for a right to work in the home office. Not only employers, but also employees need flexibility, said the SPD politician in Hanover. “The fact that individual associations are not yet so good at the topic and have actually not welcomed any innovation since the fax machine was introduced should not prevent us from doing so.” In future it will be important to use positive experiences from the crisis. “I believe that there should be such opportunities in a more digitalized work society.”

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The chief executive of the Federation of German Employers’ Associations, Steffen Kampeter, had previously rejected Heil’s plans. “We need a moratorium on burdens instead of other requirements that limit growth and flexibility,” he said. There was also criticism from the coalition partner. “I am in favor of making an offer for home office – but a right to home office, because I have great difficulties,” said the labor market policy spokesman for the CDU / CSU parliamentary group, Peter Weiß. Heil received approval from the Greens and the FDP. dpa

EU Commission approves government aid to Condor in corona crisis

Monday, April 27, 9:00 a.m .: The holiday airline Condor receives help from the federal government and the state of Hesse and is thus saved for the time being. The federal government and the state are guaranteeing loans totaling EUR 550 million in order to survive the Corona crisis. The European Commission has already approved the support.

Condor had applied for the aid in a dramatic situation. Regular flight operations are currently not possible due to the travel restrictions that are intended to limit the spread of the coronavirus. Holiday flights do not take place if Condor also uses part of the fleet for freight connections. She is also currently flying harvest helpers from Romania to Germany. Due to the current aviation crisis, the Polish Aviation Group (PGL) had recently withdrawn as a buyer of Condor, making the company’s situation even worse.

With the decision, Condor can now apparently survive a longer flight stop and will probably not start looking for a new investor until 2021 at the earliest if the consequences of the Corona crisis have largely been overcome. The company was supposed to leave the protective shield process in April, in which it had saved itself after the collapse of the previous owner Thomas Cook in autumn 2019. But that will probably be delayed by a few months now. However, Condor continues to strive to leave the proceedings. In this case, a trustee would have to formally own the airline until a new buyer is found.

Condor receives EUR 256 million to replace the bridging loan of EUR 380 million that the state and the federal government granted it for six months last autumn. It had only drawn about two thirds of the loan. In addition, the airline will receive 294 million euros from the federal corona protection program.

The German government had previously granted the travel company TUI loan guarantees amounting to 1.8 billion euros. Lufthansa is also currently negotiating a rescue package worth billions with the responsible ministries. Lufthansa boss Carsten Spohr recently made it clear that the corporation could not survive the corona crisis without state aid. Jens Flottau, Frankfurt

Adidas expects a drop in sales and a loss due to closed stores

Monday, April 27, 8:30 a.m .: The world’s second largest sporting goods company Adidas is suffering massively from the corona crisis. In the first quarter, which mainly showed the consequences of the store closings to reduce the risk of infection in China, sales already plummeted by 19 percent to 4.75 billion euros, as Adidas announced in Herzogenaurach on Monday. In the second quarter, in which the crisis hit the rest of the world, the management around CEO Kasper Rorsted even anticipates a decrease of 40 percent. The operating result was still positive in the first three months at 65 (previous year: 875) million euros, although it shrank by more than 90 percent. From April to June, however, there would be a loss, Rorsted announced. Since mid-March, over 70 percent of the company’s own stores worldwide and most of the shops of the sporting goods retailers have been closed.

The group has created a financial buffer of more than four billion euros for the crisis. Adidas got an emergency loan of three billion euros two weeks ago, of which the state development bank KfW alone provides 2.4 billion. In addition, lines of credit had been drawn, so that Adidas already had almost two billion euros available at the end of March to make up for the cash outflows.

In the first quarter alone, more than 1.4 billion euros were paid out, although Adidas stopped a billion-dollar share buyback, the dividend fell and managers waived bonuses. After public protests, Rorsted had withdrawn the decision to suspend the rents for the shops. At the end of 2019, the company still had more than 900 million euros on its high edge, the net debt at the end of March was 570 million euros. Analysts had expected Adidas to get off a little more lightly in the first three months. They had only expected an 80 percent drop in operating profit. The Adidas share fell 1.4 percent before the exchange. Online sales, which soared 35 percent in the quarter, could not make up for the collapsing store sales. In China alone, the largest single market, the company lost 800 million euros in sales – a decrease of 58 percent. After the virus outbreak in the megacity Wuhan in January, almost all shops in the country remained closed for weeks. So that the unsold goods did not pile up in the warehouses, Adidas took back products from the retailers.

Adidas does not have any forecasts for the year as long as it is unclear how long the stores in Europe and America will have to remain closed and whether customers will buy as before the crisis. “We are currently focusing on coping with the situation and stepping up our efforts to benefit from the recovery in China and the opportunities in e-commerce,” said Rorsted. In March, Adidas sold 55 percent more goods online. Reuters

Internal letter: Airbus boss prepares employees for cuts

Monday, April 27, 6:30 a.m .: Airbus CEO Guillaume Faury apparently prepares the company’s approximately 135,000 employees for job cuts and far-reaching cost-cutting measures. The survival of Airbus would be at stake if the company took no action, Faury Bloomberg News said on Friday in an internal letter that was available to the news agency. The aircraft manufacturer has started implementing government-sponsored programs to take some 3,000 workers on holiday in France, “but we may need to plan more extensive measures now,” Faury wrote.

To limit cash outflows, Airbus announced this month that it would reduce the production of smaller models by a third to 40 jets per month. In addition, the targets for larger jets were shortened: the production of wide-body aircraft is cut by up to 42 percent. “In other words, we lost about a third of our business in just a few weeks,” wrote Faury. “And, frankly, that’s not even the worst case scenario we might have to face.”

The chief executive said the new production plan would remain in effect until a more thorough assessment of demand is possible. Faury assumes a period of two to three months. It was still too early to fully assess the effects of the corona virus on the aviation industry and the pace of a market recovery. Airbus did not publicly comment on the internal communication. Bloomberg / Reuters

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