Germany

Thousands of jobs on the line as German retail giant goes bust

Article published on the 2009-06-09 Latest update 2009-06-09 15:25 TU

Employees at Arcador headquarters in Essen

German retail and tourism giant, Arcandor, has filed for bankruptcy with the possible loss of around 43,000 jobs in Germany. The move comes after the government turned down a request by the company for emergency state aid. Arcandor employs 70,000 people in Europe with the majority based in Germany.

Arcandor is the major shareholder in the Thomas Cook travel agency which will be unaffected by the insolvency proceedings. But its department store chain Karstadt as well as mail-order company, Quelle, will see job losses.

On Monday, the government turned down a request from the company for 650m euros in state loan guarantees and 437m euros in emergency loans. However, the firm was given a final chance to submit an improved bid. Arcandor later admitted its board could no longer raise the necessary funds.

The German government's decision not to save the company follows its efforts two weeks ago to bail out carmaker Opel with billions of euros in aid.

Chancellor Angela Merkel emphasised that Opel represented a 'special' case.

Meanwhile, there are few signs of an economic recovery in the Eurozone. Figures just released show Estonia's economy shrank by more than 15 percent this year.

The Czech economy has also contracted by 3.4 percent over the last 12 months.