Is the economy bad-mouthing the situation in Germany? The DIHK points to facts and says: sugarcoating doesn’t help either.
Companies in Germany do not expect a strong economic recovery any time soon. “The economy isn’t slowing down, but it’s not going up either,” said the managing director of the German Chamber of Commerce and Industry (DIHK), Martin Wansleben, in Berlin at the presentation of a new economic survey.
Business situation remains clouded
According to the survey, only three out of ten companies rate the current business situation as good, and a quarter as bad. The DIHK once again pointed to structural problems: high energy and personnel costs, a shortage of skilled workers and excessive bureaucracy put a strain on companies. In addition, there is a high tax burden compared to international standards.
According to the survey, companies’ business expectations are brightening – but pessimistic assessments still predominate. “The hopes of recent months that good foreign business or a revival of domestic demand could act as a driving force for domestic companies have not been confirmed,” said Wansleben.
According to the survey, only a quarter of companies are planning to invest more. Wansleben spoke of “alarming signs of gradual deindustrialization. The DIHK is predicting at best stagnation in economic growth for this year. The federal government and economic institutes are only expecting minimal growth.
Situation in individual sectors
The assessment of the situation in the industry has deteriorated even further compared to the beginning of 2024. New orders remained at a low level, while the costs for energy and raw materials, inputs, loans or wages remained high or increased, according to the DIHK. Consumer restraint is putting a strain on the business of consumer goods producers. Retailers are also feeling subdued demand. In the construction industry, on the other hand, the business situation is improving slightly. The prices for building materials have fallen.
“Brightening doesn’t help”
There are discordant notes between the leading business associations and Chancellor Olaf Scholz (SPD). The Chancellor accuses the business community of bad-mouthing the situation – he points to falling inflation, falling energy costs, high employment and progress in the expansion of renewable energies, for example. Wansleben said: “Whitewashing doesn’t help either.” The federal government must now take action, and this must become apparent in the negotiations on the 2025 budget. “The spirit must be changed.”
Specifically, the DIHK is primarily calling for tax relief in order to provide incentives for investments. In addition, the bureaucracy must be reduced and solidarity must be completely eliminated. The FDP wants the latter, but this is controversial within the coalition.
FDP economic politician Reinhard Houben said: “Stagnation cannot be the aim of the German economy. The federal government must set the course for growth and competitiveness.” One building block is reducing bureaucracy. Houben also pointed out the importance of limiting new debt.
Warning of trade dispute
An intensification of the trade dispute with China could have a negative impact. US President Joe Biden had imposed special tariffs of 100 percent on electric car imports from China. China could take countermeasures. The EU is currently investigating the extent to which China is distorting the market for electric cars. A decision as to whether the EU will impose punitive tariffs is still pending.
With regard to the importance of the German export industry, Wansleben said that from a German perspective there are no winners in tariffs. Politically, the dams would burst and this would be “extremely dangerous”. Germany would pay the bill.
DIHK survey
Source: Stern
