Takko, Douglas, All Names - comment

The German government has found that it will be earning an extra surplus of €126 bn between now and 2026 compared to its most recent estimate in May. Even though gas prices and general economic uncertainty are weighing on the precision of the forecast, the strength of the labour market and high inflation have raised expectations considerably. The transmission to tax revenues comes primarily via estimated VAT collections, which will rise with price and volume of transactions.

Please forgive yours truly for believing that what is good for Germany must be good for Europe… Was Kwarteng ahead of his time? The effect is the same that we feel is underrepresented in many corporate forecasts. Rising wages will translate into the economy and companies will adapt.

Germany specifically is planning on raising the tax-free rate next year, which should be particularly good for Takko. Meanwhile, consumer sentiment seems to have stabilised (at almost historically low levels) recently and consumers are expecting to earn more next year.

On a side note: European Wholesale Gas prices turned negative in Amsterdam for an hour yesterday to €-16 per megawatt hour as Europeans have bought more than storage facilities can take. German families are competing on who can brave the cold longest before turning on their heating - which we thought was good for Takko if it translates into more clothes worn at home. But it turns out that this bravery is greatly facilitated by a heat wave that has Temperatures across the country some 10 degrees above normal. So we’re guessing that footfall will be disappointing this autumn.