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Portfolio > Economy & Markets

German Woes Grow

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Germany is not having a good month. In addition to all the bickering over Greece and its bailout, German business confidence fell for the fourth month in a row as European financial woes continued to build. For some wealthy Germans, the news was worse: Swiss wealth manager Julius Baer contacted some of its German clients after it was discovered that an employee had stolen data about their offshore bank accounts in Switzerland.

Bloomberg reported Monday that the Ifo Institute in Munich said its business climate index had dropped from 103.2 in July to 102.3 in August, the lowest since March 2010 and lower than had been predicted by a poll of economists. Economic growth also fell, from 0.5% in Q1 to 0.3% in Q2 amid falling demand for exports worldwide.

Jens-Oliver Niklasch, an economist at Landesbank Baden-Wuerttemberg in Stuttgart, was quoted saying, “Recent economic data are not encouraging. The construction industry as well as the export industry will see a slowdown in the months to come.”

A GDP breakdown issued Thursday showed that capital investment also fell, down 0.9% in Q2 from Q1. Plant and machinery spending fell 2.3% while construction spending dropped 0.3%.

Meanwhile, the employee from Julius Baer who was suspected of stealing data on German clients’ offshore accounts has been fired and arrested, according to Jan Vonder Muehll, a spokesman for the firm. In the report, he was quoted saying, “We launched an internal investigation and we discovered a case of data abuse. We are in contact with potentially affected clients.”

North-Rhine Westphalia has been rumored to have purchased Swiss account data on wealthy Germans in the form of CDs. According to Reuters, Switzerland and Germany have been tussling over tax evaders for years, with Germany paying for stolen data on Swiss accounts.

Julius Baer had said on Wednesday that it had reached out to some clients over concerns about data theft and the acquisition of CDs by German authorities.


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