Germany: Thousands of credit insurance limits for craftsmen canceled

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GD Holz/Fordaq
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The German rescue package for trade credit insurers launched in April spans a maximum of € 30 billion over the German economy in order to compensate for possible defaults by insurers. The expectation of the federal government associated with the protective shield was based on the assumption that existing cover commitments would continue to be maintained. Market leader Euler Hermes confirmed this position and also assumed that cover commitments for healthy companies can be maintained through the protective shield, chain reactions can be avoided and the economy as a whole can be supported.

The current development in the timber trade shows a completely different picture: According to numerous reports from GD Holz member companies, thousands of credit insurance limits for craftsmen have been canceled across the board for the end of the year in the past few weeks. In some companies, more than three quarters of the customer volume is affected, apparently without a precise credit check - solid craft businesses, discount payers with full order books until mid-2021 and beyond. The woodworking industry (joiners / joiners / timber construction companies) is the most important customer group for the timber trade and has a very good economy, the construction industry and building completions continue to grow.

"We cannot understand why the insurance limits are being canceled in our industry and in no way corresponds to the statements made by the credit insurer mentioned in April," said GD Holz chairman Philipp Zumsteg. From the point of view of the GD Holz, the terminations are therefore disproportionate to the well-functioning industry and show that there is probably a contribution to the discussion about a possible extension, which is not necessary at this point. GD Holz has therefore written to Federal Minister of Economics Peter Altmaier in a letter. The association calls for a possible extension of this protective shield to be carried out only very restrictively and selectively for sectors that are really in need. “It is unacceptable that general risks are socialized at this point and profits run into the balance sheet,” says Zumsteg. It is now time to take a very close look at where this protective screen is still required and where it is not.

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