German Industry Calls for Investment Certainty Amid Political Uncertainty
Germany’s industrial sector is facing a critical investment deficit due to uncertainty over the future political direction of the country, according to Peter Leibinger, President of the Federation of German Industries (BDI). "Germany as a business location has come to a standstill," Leibinger said. "Companies are not investing or are investing far too little domestically."
A recent survey of businesses by the German Economic Institute (IW) on behalf of the BDI revealed that one in four companies have recently ceased investing, neither maintaining nor replacing their machinery and equipment. One-third of companies do not plan to invest in the future either.
"The biggest problem is uncertainty," the IW stated. "Those who do not know which technology will be politically desirable in the future will not invest millions in new equipment."
According to the survey, three out of five companies suffer from excessive bureaucracy and urgently desire relief and faster approval procedures. Every second industrial enterprise demands competitive energy and electricity costs. The industry requires targeted and predictable relief, as costs are too high compared to international benchmarks.
"Companies need to develop trust that the government has grasped the seriousness of the situation and is prepared to act consistently and swiftly to end the dangerous downward spiral of stalled investment and sluggish growth," Leibinger stressed. "We need considerably more planning security."
The survey also highlighted specific areas where the government can create a more investment-friendly environment:
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Energy Policy: High energy and electricity costs remain a major hurdle for German industry. The government must implement measures to reduce these costs and improve the competitiveness of German businesses.
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Bureaucracy: Excessive red tape and lengthy approval procedures are a significant impediment to investment. The government should simplify regulations and streamline approval processes to make it easier and faster for companies to invest.
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Labor Market: The shortage of skilled workers is a growing challenge for German industry. The government should invest in education and training programs to ensure that the workforce has the necessary skills to meet the demands of the future.
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Taxation: The German tax system needs to be reformed to make it more attractive for companies to invest and create jobs. The government should consider lowering corporate taxes and providing incentives for research and development.
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Infrastructure: Germany’s infrastructure is in need of significant investment. The government should prioritize projects that improve transportation, energy transmission, and digital connectivity to support economic growth.
Leibinger emphasized that the upcoming federal election on February 23rd provides a crucial opportunity for candidates to address the concerns of industry and outline their plans to create a more favorable environment for investment.
"The future of the German economy is at stake," Leibinger said. "We urge all political parties to make clear commitments to a more investment-friendly policy and to implement measures that will restore business confidence and stimulate economic growth."
