In Germany, Energy Price Shock Triggers Fears of Insolvency Wave

Hakle has been a German household name since 1928, but the Duesseldorf-based toilet paper manufacturer said all it took was this summer's gas price shock to drive it into insolvency, Reuters reported. Energy-intensive firms such as Hakle were particularly vulnerable after Russian gas supply cuts to Europe, which Moscow has blamed on Western sanctions following its invasion of Ukraine in February. "In a very short time, electricity and gas prices have exploded to such an extent that of course they cannot be passed on to our customers so quickly," Karen Jung, the company's head of marketing, told Reuters. The number of insolvencies like Hakle's has jumped since August, stirring fears that a wave of bankruptcies could engulf Europe's largest economy as another consequence of Russia's energy standoff with Europe. The companies' plight is heaping more pressure on Chancellor Olaf Scholz's three-way coalition, which is trying to protect Germans from soaring gas bills, decades-high inflation plus the threats of recession and winter fuel shortages. The annual energy price increase in Germany in August on average was 139%, latest producer price data showed this week. Economy Minister Robert Habeck already sparked a backlash this month when he played down the issue in a TV interview, saying that companies would not necessarily go insolvent even if hard-up customers no longer bought their products. Read more.