Escape from Germany with companies moving production and jobs abroad. This is the picture summarized in a study conducted by the German Business Federation (Bdi), which noted that an increasing number of companies are considering taking concrete measures to protect themselves outside national borders. Relocation measures have already been initiated by 16% of midsize companies Bdi has interviewed. Another 30% are considering whether or not to do the same. There are both specific reasons and more general concerns about the state of the German economy to shift production elsewhere.
Energy costs
“About two-thirds of the companies we interviewed see energy and resource prices as one of their most pressing issues,” said Siegfried Russwurm, president of the Confindustria counterpart. “Electricity prices for businesses must reliably and permanently fall to a competitive level, otherwise transformation [verde] Russwurm punched the red-green-liberal coalition led by Olaf Sholz, adding that “it is the responsibility of politicians to improve business conditions in Germany.” country since 2021.
Stars and Stripes quiz
Discontent is also spreading over the lack of measures similar to those adopted by the United States, which has issued the Inflation Reduction Act (IRA) in recent months. green industry. The effectiveness of the incentives was immediately evident. Electric car maker Tesla had planned to set up its largest battery factory near Berlin. The company, founded by Elon Musk, announced its decision to focus on the stars and stripes market in February, thanks to US subsidies and rising energy prices in Europe.
Reduced investment
Other concerns relate to economic growth. According to a study published by the European Commission on the eurozone 2023, forecasts say that Germany will be among the slowest growing economies. High energy costs and carbon prices can deter investment. “We are already seeing a significant drop in investment in energy-intensive industries in Germany,” he told the newspaper in April. Augsburger Allgemeine Clemens Fuest, head of the Ifo Institute, Germany’s leading economic research institute.
Unpopular subsidies
The German government has been trying to fix this for a while. Green stock economy minister Robert Habeck last month proposed a package of measures, including temporary subsidies, to lower the price of electricity for businesses. 200 billion euros were put on the plate. Earlier this week, the department head announced that German companies can also apply for a “carbon contract program” to subsidize the transition, but only by selected candidates, thus facilitating a fossil-free production process. . The path followed by Habeck, which lost its popularity in opinion polls as a result of these reforms, is not well received by companies.
new landings
The German Business Federation considers that more comprehensive reforms are needed. “For further investment, industries in Germany need bureaucracy and targeted tax breaks,” Russwurm said on Monday. Berlin is paying the price for choosing to rely too long on relations with Vladimir Putin and purchases of large volumes of Russian gas. What seemed like a winning choice for a long time has brought the worst side of the coin out with the war in Ukraine. While the government remained in port to seek solutions, businesses gave up their moorings to sail elsewhere.
Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
