Business Briefs | Business| Economy and finance news from a German perspective | DW | 04.05.2003
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Business Briefs

Report shows budget deficit increases, SARS cuts deep into German carrier's Asia service, business co-operation sought in Saudi Arabia.


Germany will need to employ extreme measures to escape the EU's wrath this time

Germany enters EU budget warning territory again

The German finance ministry is said to be unaware of the sources of a report in the weekly magazine Der Spiegel that says that the department expects the country's budget deficit to rise close to four percent of its Gross Domestic Product (GDP) this year, breaching the European Union's ceiling of three per cent. A ministry source told Reuters that the government's budgetary position would become clear when new tax estimates are drawn up May 13-15. Citing an internal document, Der Spiegel said officials in Finance Minister Hans Eichel ministry were forecasting new borrowing of €31 billion. Eichel had hoped to hold new federal borrowing this year to €18.9 billion, in line with a constitutional ban on borrowing more than is spent on investment. Federal borrowing in 2002 accounted for around 45 per cent of Germany's total deficit. Germany's budget deficit ballooned to 3.6 percent of GDP last year prompting the EU to initiate disciplinary proceedings against Berlin for breaking the Union's three percent cap. In a bid to keep the single currency stable, the EU insists that members keep budget deficits under three per cent of gross domestic product or face sanctions, including possible hefty fines, if they ignore EU recommendations on corrective action.

Lufthansa cuts flights to Asia as SARS panic spreads

The deadly respiratory virus SARS is costing the German carrier Lufthansa €55 million a week, according to an article to be published in the weekly magazine Focus on Monday. "We are losing 55 million euros a week over SARS and the economic downturn," said spokesperson Klaus Walther as quoted in the article. He added that the number of flights per week to Shanghai and Beijing had been slashed by half to 14 from 28. The news that Lufthansa in hemorrhaging cash as the SARS virus decimates foreign travel follows the announcement last week that it had decided to ground another 15 planes in response to the epidemic, saying that demand for certain connections to Asia had fallen dramatically, by up to 85 percent, and steps needed to be taken. Lufthansa has also cut the number of flights per week to Hong Kong to three from 13, while "numerous long haul flights and those with few passengers will also be cancelled," the company said. Lufthansa announced at the end of March that it did not expect its performance to equal that of 2002 without giving details.

Saudi co-operation sought by German businesses

German businessmen will meet with their Saudi counterparts at the Riyadh Chamber of Commerce and Industry on Sunday to discuss prospects of expanding cooperation in different areas including information technology, education and tourism, according to a statement carried by Saudi Press Agency. The German team will include representatives of a number of companies specialized in tourism, air transport, hotel services, education, information technology, telecommunications, electronic commerce, Internet services and commercial arbitration. "The meeting aims at enhancing economic, commercial and investment cooperation between the Kingdom and Germany," the statement said.

Compiled by DW staff from wire reports and other sources