Germany

The European Union took a big step on Monday toward building a financial firewall strong enough to prevent the spread of fiscal contagion to major economies like Spain after Germany dropped its opposition to bringing the Continent’s total bailout capacity to more than 690 billion euros, or $916 billion, the International Herald Tribune reported. Angela Merkel, the German chancellor, said on Monday at a news conference in Berlin that her government remained determined that a permanent European rescue fund should be capped at 500 billion euros.

Germany's 16 states are discussing ways to help the staff of insolvent drugstore chain Schlecker who face redundancy as the retailer is due to close more than 2,000 stores, Reuters reported. Unlisted Schlecker, which competes with privately-held peers Rossmann and dm, filed for insolvency in January after struggling to secure funds against a gloomy economic backdrop.

Germany appears to have accepted defeat in its efforts to convince other European countries to impose a kind of sales tax on financial transactions in the European Union or in the smaller euro zone, possibly putting up an obstacle to ratifying the permanent euro-zone bailout fund in Parliament, The Wall Street Journal reported. "The probability of imposing an EU-wide financial-transaction tax is very slim," German Finance Minister Wolfgang Schäuble told a gathering of conservative lawmakers on Tuesday, according to a person in the meeting.

German solar project developer solarhybrid AG said on Tuesday it will open insolvency proceedings with a German court, Reuters reported. It said it was filing for insolvency "due to illiquidity" with the court in Arnsberg. No other details were given in a statement issued late on Tuesday. In December, Solar Millennium AG filed for insolvency after running out of cash before it was able to finalize deals to sell large projects in the United States and Spain. German solar module marker Solon SE also filed for insolvency in December.

Insolvent German drugstore chain Schlecker aims to find an investor by the end of May, its administrator told a German magazine, Reuters reported. "If everything goes according to plan, we can be done with the investor process by the Pentecost holiday," Arndt Geiwitz told weekly Wirtschafts Woche, according to an excerpt of an article to be published on Monday. Unlisted Schlecker, which competes with privately held peers Rossmann and dm, filed for insolvency in January after struggling to secure funds against a gloomy economic backdrop.

Europe's low interest rates are fueling rising house prices in Germany, presenting the region's policy makers with a fresh challenge in their fight to restore its economic health, The Wall Street Journal reported. Signs of a property-price boom in parts of Germany are becoming a headache for the European Central Bank, which has for the past two years struggled to fashion a single stance on interest rates and support for banks that fits countries as disparate as depressed Greece and mighty Germany.

Insolvent German drugstore chain Schlecker will close around 2,000 stores and lay off almost half its workforce, the price for failing to keep up with rivals in a rapidly changing consumer market, Reuters reported. "It is very harsh that Schlecker's employees, some of whom have been with the company for a long time, are losing their jobs, and it is a decision that we did not take lightly," insolvency administrator Arndt Geiwitz said on Wednesday.

German reluctance to bolster EU debt rescue funds has delayed talks on the issue despite calls from the G20 for Europe to make progress on the issue, a eurozone governmental source said Tuesday, Agence France-Presse reported. "Germany is not ready," the source told AFP in reference to the latest developments in a global tug-of-war over eurozone emergency bailout funding.

Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk “incalculable” damage, defying a public backlash against more bailout funds, Bloomberg reported. In a vote that showed dissent in her coalition growing, 496 members of the lower house, or Bundestag, voted in favor of the 130 billion-euro ($174 billion) package in Berlin; 90 voted against and five abstained.

The German government is set to resist or delay increasing the size of the eurozone’s financial “firewall” against contagion from the Greek debt crisis, in the face of mounting pressure from its partners, the International Monetary Fund and the US administration, the Financial Times reported. Steffen Seibert, spokesman for Angela Merkel, the German chancellor, insisted on Wednesday that Berlin saw no need to increase the size of the permanent €500bn European Stability Mechanism. “The German government’s position has not changed,” he said.