Unsatisfactory industrial policy
Survey: Corporations pull the handbrake on investments
8/1/2023 3:21 p.m
Energy and raw materials are becoming more expensive, the order situation remains low, the mood among the population to buy is falling: large German companies are taking action and, according to a survey, want to cut investments. Sometimes they blame politics.
More and more large companies from Germany want to stop investment projects. This is shown by a new survey of 100 CEOs of German companies, published by the auditing and consulting company EY. More than half of the CEOs surveyed stated that they wanted to stop a planned investment in the next six months. The proportion has increased by 24 percentage points to 53 percent since the last survey in January.
That is more than in an international comparison: 37 percent of the CEOs worldwide gave this answer. The increase was also significantly lower at five percentage points. In addition, more companies are also putting their locations to the test. The proportion of German companies planning to relocate their business premises has risen from 30 to 39 percent since the beginning of the year. Among all survey participants there was a slight increase from 36 to 37 percent.
EY surveyed 1,200 CEOs worldwide for the survey. Other topics included the economic prospects, strategic challenges and employee retention. The survey was conducted in June and July.
Rising production costs and falling desire to buy
EY partner Constantin Gall sees the companies in a dilemma: Many companies are suffering from high energy and raw material prices, an unsatisfactory order situation and a declining mood to buy, he said according to the announcement.
In addition, there is no convincing industrial policy in Europe and Germany that ensures competitive production costs and at the same time provides investment incentives. In view of multi-billion dollar subsidy programs such as the US government’s Inflation Reduction Act, he warned: “Europe and Germany are in danger of being set back significantly in the location competition with the USA. It would be important, for example, for us in Germany to have internationally competitive energy costs,” said Gall.