“The situation has rarely been so bleak”
Business associations are pessimistic about 2024
December 27, 2023, 4:02 p.m
The budget dispute, high interest rates and rising energy prices mean that various sectors do not expect any growth in the coming year. On the contrary: According to a study by the German Economic Institute, the majority expect a decline in production or business.
The majority of sectors in the German economy are pessimistic about the coming year. As a survey by the employer-related Institute of the German Economy (IW) among 47 German business associations showed, 30 of them describe the current situation as worse compared to the previous year – and only nine expect higher productivity next year. Energy-intensive companies are looking particularly bleakly into the new year.
“The situation has rarely been as bleak as it is now, and rarely has the prognosis been so pessimistic,” is the summary of the authors of the study. According to the study, energy-intensive industries in particular, such as foundries, the ceramics industry, the leather industry and plastics processing, are expecting a significant deterioration. The real estate industry, construction and construction industries as well as banks and savings banks are also pessimistic in view of the high interest rates.
47 associations were surveyed in November and December. 30 of them rate their current situation even worse than a year ago, when “there was no good mood in the German economy” due to the energy crisis, as the IW explained. Six sectors rate their current situation better, for example the tourism industry, while eleven see it as unchanged.
Companies lack trust in general conditions
Only nine of the 47 business associations expect a higher level of production next year, such as the pharmaceutical industry and the automotive industry, which point to better production conditions. However, not a single association is assuming significantly higher production. In contrast, 23 associations expect a decline in production or business, while 15 associations expect the level to remain the same.
This picture also has consequences for employment: Only five associations report an increase in employment for 2024, 23 business associations expect a decline and 19 expect stable employment. “The German economy is suffering across the board from being unable to plan,” explained IW director Michael Hüther. The “budget disaster” in the government coalition shows how serious the situation is.
Hüther said on Deutschlandfunk that there was a lack of trust in the general conditions. Against this background, he called on the federal government to work with the opposition. He rejected lifting the debt brake, but suggested a national investment and transformation fund. This must be anchored in the Basic Law. Otherwise there is a risk of further de-industrialization and migration abroad.
Price increases put a strain on small businesses
The credit agency Schufa published its own survey among small businesses and self-employed people, the majority of whom are also worried about the future. Those surveyed cited general price increases (79 percent of small businesses and 65 percent of self-employed people) and bureaucracy (70 percent and 47 percent, respectively) as the biggest challenges.
In addition, 40 percent of small businesses and 36 percent of self-employed people stated that they had fewer orders than in the previous year. 60 percent of small businesses and 53 percent of self-employed people are therefore afraid of a loss of sales or income – also due to unpaid invoices from customers. 509 self-employed people and 302 small businesses were surveyed in November.