More than 15,000 German stores face bankruptcy brought on by energy prices that have risen an average of 147 percent since the beginning of this year, the German Retail Association (HDE) said last week.

In a letter to economy minister Richard Habek, the association said “exploding energy costs” are “existentially threatening” German’s retail sector and as many as 16,000 shops could disappear this year in a “negative trend” that would extend through 2023.

Electricity costs have risen to 3 percent of revenues for retailers and could reach 5 percent next year, the HDE said.

Such an increase would exceed profits for many businesses and drown them in red ink, according to the association.

Clothing retailers average a profit of 2.1 percent, food stores no more than 4 percent, and shoe stores already are operating in the red by -1.2 percent, the HDE reported. 

Inflation and households’ plummeting purchasing power make it impossible for stores to pass the higher costs to consumers; therefore, the German government should reduce tariffs on imported fuels and slash taxes on electricity, the HDE urged.

TREND FORECAST: Lockdowns during the COVID War set up these businesses for failure; Russia’s cutoff of most of its natural gas exports to Europe and the West’s war-related sanctions delivered the death blow.

As COVID variants rise up again this fall and winter, most countries other than China will be less draconian in their response, simply because their economies are unable to withstand more mass shutdowns.

Instead, national governments will treat COVID as they do the flu: they will encourage people to be vaccinated and take precautions, but will not close schools and businesses.