Contagion, the short list

 UK:

Waves of British firms closing as SME debt hits near-record levels (tipranks.com) - Oct 6

SWEDEN:

From ZUERST! Deutsches Nachtrichtenmagazin, October 5, 2022

This is how European industry is dying: Swedish steel mills are struggling to survive

Stockholm. Not only the German steel industry has its back against the wall because of the unaffordable energy costs. The Swedish steel mills are also struggling to survive, and just like in Germany, the first companies are already having to shut down.

...

Up to now, Europe's advantage in international competition has been associated with comparatively cheap energy - a direct effect of cheap Russian gas supplies over the decades. But this advantage vanished into thin air at the latest when the Nord Stream 2 gas pipeline was blown up. Not only in Sweden will many lights go out in the near future and many tapes will stand still. (mu)

Posted by: António Ferrão | Oct 5 2022 9:38 utc [Moon of Alabama comment section]

GERMANY:

“A Structural Rupture” – German Companies Shutting Down In Response To Record Energy Prices – ac.news - Sept 2

 

FRANCE:

Economic uncertainty causes hike in voluntary business closures in France – EURACTIV.com - Sept 26

Italy:

[Over 100,000] firms in Italy on brink of closure  (bignewsnetwork.com) - Sept 26

Summary, of sorts:

European Countries Are On The Brink Of Economic Disaster, OECD Says | The Daily Caller  - Sept 26

The Melting Euro | Gates of Vienna translated from Die Welt - posted at GoV Oct 4

The current inflation crisis is picking up steam in Europe. The following report is from Germany, but has wider applicability within the Eurozone. When Germany sneezes, Europe catches cold. Or Covid, as the case may be.

Many thanks to Hellequin GB for translating this article from Die Welt. The translator’s comments are in square brackets:

34 percent “perceived inflation” — Germany is threatened with dangerous dynamics

The inflation rate in Germany is currently at a record high. But for consumers, inflation feels three times as high, an exclusive study shows. Now that could set in motion a self-fulfilling prophecy.

Inflation in Germany rose to an average of 10% in September. This is the highest price increase since 1951, when the inflation rate in Germany was 10.5%.

However, a completely different price increase is registered with consumers. According to a survey by the International University (IU) based in Erfurt, the perceived inflation rate among Germans is 34.2%.

The reason for the large difference between officially measured and individually perceived inflation: “We always perceive inflation where we have consumer spending,” says Johannes Treu, Professor of Business Administration at IU. People are interested in what they have to pay every day to meet their basic needs.

“If we notice every time we go shopping that the shopping basket is becoming more expensive, we tend to overstate the real increase overall,” says the economist. People are much more aware of the prices for everyday things like electricity, gas and groceries.

For the official statistics, the prices are recorded in a defined basket of goods that has not changed over a long period of time, and contains various representative goods and services. This guarantees comparability, but has the disadvantage that the shopping cart also contains items that are rarely or never bought individually. But for things that are bought every day, the price increase is registered very precisely. Given the explosively rising prices for food, fuel and energy, it is therefore not surprising that the perception of inflation is three times higher than the official statistics. [For sure, because luxury items don’t seem to go up in price in the same way as everyday items that are needed for SURVIVAL. Food, for instance, isn’t even included in South Africa when it comes to inflation.]

For women, the perceived price increase is even higher at 39.3%. Men, on the other hand, only registered a price increase of 29%. The representative survey took place in mid-September. At that time, the inflation rate reported by the Federal Statistical Office for August was just 7.9%.

It is not yet known whether the increase to 10% has also increased perceived inflation. But it’s likely. Because four out of five respondents see no end to the current inflation. Specifically, 86% of women and 79% of men expect prices for goods and services to be “much higher” or “higher” in October than they were in September.

A self-fulfilling prophecy

The rising prices are a concern for 92% of those surveyed, with more than half even citing major concerns. “If I have the feeling that inflation is high, I automatically expect things to get even more expensive,” explains Treu. Companies took advantage of this; because of these expectations they would raise prices even more and unions would then also demand higher raises. But such expectations can trigger a classic wage-price spiral. According to Kerstin Bernoth, a researcher at the German Institute for Economic Research (DIW), this effect is based less on actual structural factors than on psychological dynamics. If consumers, but also companies, assumed that prices will continue to rise, people may prefer to make purchases and demand higher wages. Companies, in turn, will raise their prices if they expect to have to pay higher wages and higher producer prices. “Higher inflation expectations can become a self-fulfilling prophecy and boost actual inflation,” said Bernoth.

In their survey, the IU also wanted to know where the Germans are tightening their belts significantly — and where less. According to this, four out of five respondents cut back on energy costs, around a quarter on the purchase of new household items, as well as on trips and hotels. According to the survey, the least savings are in education.

Even when it comes to entertainment and enjoyment, budgeting is less pronounced: 24% of those surveyed did not go without media and entertainment or alcohol and tobacco products (21%). But no matter what area of expenditure was asked about, one constellation always remained unchanged: women limit themselves more than men.

Afterword from the translator:

Just this morning I found an old SPAR advertising paper from 2009 and compared some of the prices. For instance, 2.5kg of frozen chicken pieces were then R 14.99; they are now R 79.99 for 1.5kg. Single razor blades were R 3.99 for a pack of five; they are now R 6.99. I wonder which is more important for your daily survival, a clean shave or a full belly?

[END]

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