What: Government help for large German department store group.

Why it is important: The rescue package argues that department stores are indispensable for the life of cities.

The German department store chain Galeria Karstadt Kaufhof has reportedly been offered a subordinated loan from the German government of up to EUR 460 million. The aim is to safeguard jobs and help the hard-hit company through the crisis.

According to the government, department stores also have an important anchoring function in city centres. They are considered indispensable “crowd-pullers” and their disappearance would also jeopardise the existence of many surrounding shops. Some oppose this measure arguing that it distorts competition as well as assuming that city centres cannot exist without department stores.

Several months ago, the company’s creditors agreed to a sweeping rescue plan for Galeria Karstadt Kaufhof by which it closed 40 stores and lost 4000 jobs.

German government supports Galeria Karstadt Kaufhof