Gas Pressure: Fears Of Recession Loom Over Germany's Industries

'Not pasta then?" Germans quipped this month, on hearing that of all things, a toilet paper manufacturer had gone bust.

- Kate Connolly

Toilet paper was the second most sought-after supermarket item at the height of the pandemic, after pasta. People were rationed to ensure no one went without paper.

But the once-booming luxury brand Hakle from Düsseldorf known for "bringing comfort since 1928" with its three-ply rolls - has collapsed as a result of the energy crisis. It is the first large German consumer goods producer to fold because of soaring energy and raw material costs, and there is much to suggest that more will follow.

Last week the Munich-based Ifo Institute for Economic Research slashed its prognosis for German growth, declaring "we are heading into a winter recession". It forecast that Europe's largest economy would shrink by 0.3% in 2023, after growing by just 1.6% this year. Inflation is forecast to hit 8.1% this year and 9.3% in 2023.

"The cuts to gas supplies from Russia this summer and the drastic price increases they triggered are wreaking havoc on economic recovery following the coronavirus," said Timo Wollmershäuser, Ifo's head of forecasts, adding that he did not expect a "return to normal" until 2024, when 1.8% growth and 2.4% inflation could be expected.