Low confidence in economy
DIHK President launches a sweeping attack
07/02/2023 11:18 am
Lack of skilled workers, high energy prices, high inflation, lots of bureaucracy: the economy is complaining about many problems. The DIHK President finds clear words – and makes demands on politicians.
The German Chamber of Industry and Commerce sees great uncertainty in the German economy and no signs of a broad upswing in Germany for the time being. DIHK President Peter Adrian said: “Germany is in a recession. We are one of the few countries in Europe whose economic output is back below the pre-corona level. That is an alarm signal.” Business associations such as the DIHK have long been demanding more growth impulses from politicians, for example of a tax nature – as well as more speed in planning and approval processes and less bureaucracy.
state of the economy
If gross domestic product shrinks for two quarters in a row, economists speak of a technical recession. This was the case in the last quarter of 2022 and the first quarter of 2023. Inflation is also still at a high level. However, experts are expecting a gradual relaxation in prices.
The situation in the German economy is difficult overall, said Adrian. The mood is sometimes very bad, especially among medium-sized companies. “There is a great reluctance to invest. At the moment, we are still very much at the level of investments in equipment before Corona 2019. Actually, we should experience a clear impulse because Corona is over. It is worrying that this effect has not yet materialised.”
And the prospects? “There are still no signs of a broad upswing,” says Adrian. “We will probably experience a massive slump in the construction industry in the second half of the year.” Above all, new construction is faltering due to higher interest rates and expensive building materials. According to the DIHK President, this will have negative consequences for the entire economy. “First of all, the economy is going downhill. So I don’t dare predict when things will start to pick up again. We can probably be happy if we see zero economic growth at the end of the year and not a minus. But that means at best standstill. We need but tremendous progress to ensure our prosperity.”
Less investment
“There should actually be enough money for investments,” says Adrian. “The capitalization of the companies is still good. However, investments are still being made with caution because the uncertainty is very high. Large parts of our economy are not confident that investments will pay off in view of the high costs and sometimes even contradictory regulations in Germany .” Adrian cited the energy transition as an example of the uncertainty: What role will gas still play as a transitional technology until there is a CO2-free energy supply? “So far we have not had any green hydrogen. We also have no green electricity in such a way that companies can use it reliably and cheaply.”
Economy complains about bureaucracy
“The bureaucratic obstacles are still among the greatest challenges that companies have to deal with every day,” said Adrian, who runs a company himself. “I can confirm that from my own practice. Dealing with regulations, applications, notifications and reporting obligations is what takes up the most time. I have to use considerable capacities in my company to work through such complex processes. And this precious time is then missing to work creatively on new solutions and entrepreneurial concepts.”
DIHK President Peter Adrian
(Photo: dpa)
Companies urgently need noticeable relief from unnecessary bureaucracy: “Politicians should now calm down a bit. At the moment we have the situation that a company from Brussels, from Berlin or even from the federal states with new regulations, legal provisions, measures, laws is confronted.”
Germany in international comparison
Germany is in danger of falling further behind internationally and is already among the bottom ranks in terms of growth in the EU, said the head of the association. According to a DIHK survey from April, every third company that invests abroad primarily wants to save costs. That is the highest value in 15 years. Comparatively high energy, labor and tax costs weighed on the competitive position of local companies.
“We’re seeing a lot of demand at non-European locations in North America, South America and Asia through our foreign chambers of commerce,” said Adrian. German companies are active worldwide and that usually strengthens them at their headquarters at home. “But what should concern politicians in Berlin and Brussels: Significantly more German companies are now investing in other regions, in other countries, mainly for cost reasons. In the long run, this will lead to a gradual shift. Of course, this has an impact on jobs in Germany. Because here you can we are also losing sectors permanently.”