According to leading economists, Germany is facing a recession.
The Leibniz Institute for Economic Research Halle (IWH) forecast on Thursday that German economic output, gross domestic product (GDP), will shrink by 1.4 percent in 2023.
The Kiel Institute for the World Economy (IfW) expects a decline of 0.7 percent in its updated economic forecast.
"The German economy is in a downward spiral," write the economists.
It will “slide into a recession, in a phase in which it was just recovering from the setbacks caused by the pandemic”.
Corinna Budras
Business correspondent in Berlin.
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Julia Loehr
Business correspondent in Berlin.
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Svea Junge
Editor in Business.
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At the same time, the researchers expect high inflation rates in the coming year.
"If electricity and gas prices remain high for an extended period of time - as currently indicated - inflation is expected to rise to 8.7 percent in 2023 from a record 8 percent this year," it said the IfW forecast.
The economists from the IWH are even anticipating 9.5 percent inflation next year.
Only the RWI in Essen still expects low growth of 0.8 percent and a lower inflation rate of 3.5 percent for the coming year.
The figures from Halle and Kiel increase the pressure on the federal government to expand the aid programs for companies after the relief package, which is primarily aimed at private households.
"We will put up a broad rescue package," said Economics Minister Robert Habeck (Greens) on Thursday in the Bundestag.
The energy cost containment program launched in mid-July is to be opened up to a larger group of companies.
Energy subsidies are to be expanded
So far, only companies that come from a sector classified as energy-intensive and that are in international competition can apply for subsidies to cover their increased energy costs.
The state helps them with the part of the energy bill that exceeds twice the amount of the previous year.
Between 30 and 70 percent of this is available as a grant.
5 billion euros are available for the program.
As of mid-August, however, only 20,000 euros had been paid out.
The number of applications was also manageable.
Even before this program, the federal government had set up KfW loan programs and federal-state guarantees.
From the company's point of view, the grants are the most interesting because, unlike loans, they do not have to be repaid.
This program is now to be extended to smaller companies that have no foreign competitors.
Habeck announced that the share of energy costs in the product or in sales will also play a role here.
The middle class will be protected.
However, the program will be limited in time because politicians are also working on instruments to stop the price increase, said Habeck.
"So it can't be a permanent subsidy."
Habeck was widely criticized on Wednesday after he said on a talk show that not every business that sells less, such as higher-priced bakeries, flower shops or organic shops, is automatically insolvent – which is factually true, but Habeck sounded as if this development was not happening would be that bad.
The appearance was also criticized from the opposite direction – by the insolvency administrators.
Politicians continue to follow their guiding principle of "avoiding insolvency at all costs" instead of resorting to the existing restructuring instruments, complained Rainer Eckert, co-chair of the working group on insolvency law and restructuring in the German Lawyers' Association.
He referred to examples such as the airline Condor or the utility Prokon, which could be successfully restructured using the existing rules.
The automotive supplier Dr.
wanting to go tailor.
The company announced on Wednesday that it had filed for bankruptcy in order to be able to restructure.
Around 2000 employees are affected.
Savings should be rewarded
Meanwhile, the federal government is planning to relax insolvency law for companies.
A spokesman for the Ministry of Justice said that companies that are fundamentally healthy and able to survive in the long term under the changed framework conditions should be given time to adapt their business models.
The new regulation concerns the obligation to file for insolvency due to over-indebtedness.
So far, it has only been effective if the continued existence of a company for a period of one year is no longer particularly likely.
"With the current market conditions and uncertain developments, however, such a forecast is associated with particular difficulties even for healthy companies," said the spokesman.
Therefore, this period is reduced to four months.
The obligation to apply for insolvency remains unaffected.
An announced program is also scheduled to start in October, with which companies will be financially rewarded if they reduce their gas consumption.
The Association of German Chambers of Industry and Commerce (DIHK) called on politicians to ensure sufficient energy.
"The phones are running hot with us from companies that no longer get any supply contracts, i.e. that will no longer get energy from January," said DIHK General Manager Martin Wansleben on Deutschlandfunk.
It is important not only to help companies that are in need, but to ensure that there is enough energy in advance.
"The fear is great," said Wansleben.
The association was in favor of letting the three remaining German nuclear power plants run longer.
Habeck, on the other hand, only wants two of the three kilns to be kept in reserve until April,