Greens speak out against further debts for tax reform; Deutsche Post AG denies possible share sale; Popkomm moves to Berlin; Thomas Cook plans cuts workforce, and more.
Starting next year, Popkomm performers will prove their talent in the German capital
Greens speak out against further debts for tax reform
The German government's plan to fund intended tax cuts by a combination of measures including an estimated €5 billion in new debt has been met with sharp criticism from within its own ranks. Green Party finance expert Franziska Eichstädt-Bohlig told the Berliner Zeitung that new debt should be issued for €2 billion at the most. But Finance Minister Hans Eichel's plan to finance the government's tax reform due, which he made public on Wednesday, revealed a debt increase which would lead to just under €29bn in total new borrowing in 2004 .The government is hoping to raise €2 million from privatizations and around €1 billion from cuts in subsidies, particularly in the agriculture and the construction industries. With the planned tax cuts, Schröder hopes to boost the stalled German economy. Opposition leader Angela Merkel immediately rejected the means of financing the tax cut with further borrowing as a "flight into debt."
Post AG denies possible share sale
Deutsche Post Chief Financial Officier Edgar Ernst said he didn't expect the government to sell shares in the company right now, but failed to give a time frame when this could come about. For next year's tax reform, the German government is planning a combination of privatization revenues, subsidy cuts and limited additional new borrowing to meet shortfalls in tax revenues due to the planned tax cuts. Privatization measures would primarily affect state-owned shares of Deutsche Telekom AG and the Deutsche Post AG. Considering the weakness in the stock market and overall economy, however, such a share sale would be unlikely at present, Ernst said. Instead, more shares are due to be parked at the government-owned bank Kreditanstalt for Wiederaufbau (KfW). After Deutsche Bahn, Germany's largest holdings are in Telekom and the Post – the state owns 50 percent of shares at the Post AG, with a further 18 percent held indirectly via the KfW. At Deutsche Telekom AG it holds 30 percent of shares, with 12 percent parked at the KfW. If the state were to sell these shares, it could make an estimated €20 billion at one go.
Popkomm Moves from Rhine to Spree
After 15 years in Cologne, the world's largest music-industry trade fair Popkomm is due to move to Berlin. "The decision wasn't easy, but this was the only way to secure the future of Popkomm," said Dieter Gorny, CEO of VIVA Media AG, a key Popkomm sponsor. Michael Sallmann from the Cologne Chamber of Commerce railed against the decision, saying, "when Popkomm goes, the (Cologne music) branch will lose a beacon of light." But Berlin Economy Minister Harald Wolf welcomed the step, saying the move would further enhance Berlin's image as the number-one music metropolis of Germany. Apart from big music labels like Universal, Sony and EMI, around 150 small and midsized record companies have their headquarters in Berlin. The Popkomm will be held in Berlin for the first time in 2004. This year the fair will take place as planned in Cologne, from August 14 to 16.
Fashion Victims take to streets
A group of fashion firms in Düsseldorf has taken to the streets to fight for what they think is the unfair eviction from their showrooms – by the very city that calls itself "Germany's fashion capital." According to the group Self Help for Fashion, Düsseldorf's mayor has prohibited 150 designers from using their showrooms, claiming that the showrooms are actually zoned as offices or apartments. For its part, Self Help implies that the fashion companies are being punished for not wanting to move into spaces provided by Düsseldorf's twice-yearly Idego fashion trade fair – an event co-sponsored by the city. The mayor sits on the trade fair's board, according to Self Help coordinator Eva-Maria Gösline. The protests occurred just weeks before the next Idego trade fair, which begins on August 3. To not to be able to do business during the show would be life-threatening for the companies concerned, says Gösling: "Most mayors try to bring new firms to their cities. Only Düsseldorf tries to drive them away."
Thomas Cook plans cuts in workforce Tourism and travel group Thomas Cook plans to cut up to 20 percent of its workforce in Germany over the next three years amid an intensified restructuring effort, chairman Stefan Pichler revealed. "The goals are clear: restructuring, capacity reduction and pressure to boost productivity mean that up to 1,200 jobs must be cut in Germany over the next three years," Pichler wrote Wednesday in the group's staff newsletter "Connect". Previously, Thomas Cook had set itself a goal of cutting 1,200 jobs worldwide by the end of this year but has now decided to cut down more in Germany. Thomas Cook is jointly owned by two German companies, the airline Lufthansa and the department store chain KarstadtQuelle.
SAP beats profit forecast
Despite a drop in sales, German software maker SAP AG posted a greater than expected second quarter profit. The world's largest business-software maker said profits rose by €33 million from the previous quarter, to €232 million. The sluggish economy and weak dollar had depressed sales, which fell by eight percent in the quarter, SAP said. Nonetheless, the group was able to offset lower sales with rigid cost controls. SAP said it continued to gain market shares from rivals like U.S.-based Oracle, PeopleSoft, and J.D. Edwards.