2023-05-22 06:44:16
Dhe German economy is worried about the economy and its ability to invest – also because of rising interest rates. According to the latest, as yet unpublished economic survey by the Chambers of Industry and Commerce (IHK), only 28 percent of companies intend to increase their investments in the next twelve months.
The situation has not improved significantly since the beginning of the year, when it was 27 percent. 24 percent continue to expect a reduction in investments, two points less than at the beginning of the year. A year ago, in early summer 2022, 29 percent were planning to increase spending and 23 percent to reduce it.
At best, the chambers are observing a stagnating propensity to invest at a low level. “Such a level is not enough to compensate for the losses from the Corona years,” said the general manager of the German Chamber of Commerce and Industry DIHK, Martin Wansleben, in an assessment. “For this we would need significantly more equipment investments, i.e. the purchase of machines, devices or vehicles.”
In order to reach the level of 2019, economic growth of 5 percent would be necessary in 2023: “However, we are still a long way from that.” The federal government expects just 0.4 percent. “There is no sign of a spirit of optimism in the German economy,” summed up Wansleben. The companies showed a “remarkable resilience and creative power”. But what is missing is “above all the momentum in investments that we should finally experience after all the years of crisis”.
High interest rates as a problem
Because of the growing interest burden, every fifth company currently classifies its financing as “particularly impaired”. The value has more than tripled from 6 percent back then since early summer 2022. More than a third of those surveyed who see interest rate developments as a drag want to reduce their investments. This is the result of a preliminary evaluation of 21,000 companies for the IHK business survey, which is available to the FAZ. The entire survey will be presented this Monday in Berlin.
Wansleben said interest rates had “correctly” risen to fight inflation. But they put pressure on company budgets. At the same time, energy and raw material prices are still high, which also reduces the ability to invest. Interest rates weighed particularly heavily on building construction and the real estate industry. A third of these companies reported “severely impaired financing”.
Wansleben pointed out that in housing construction, not only the loans from the companies themselves, but also the building loans of the customers would become more expensive. “This is an enormous challenge that goes beyond the industry. Because the goal announced by the federal government of building significantly more apartments depends on it.” He linked the weak housing market to the shortage of skilled workers, since people moving house or emigrating from abroad needed sufficient affordable housing.
The DIHK boss appealed to politicians to make it easier for companies to do business. “It is now important that the laws relevant to energy supply and climate policy lead to additional investments and faster processes,” says Wansleben. “You must not stall the economy with excessive costs and overly bureaucratic regulations.” This applies not only to the energy laws but also to the supply chain due diligence laws.
The association is sobered by the world market, from which “no strong boost for the German economy” is to be expected; Rather, one observes a “sluggish demand”. Exports to China, the most important trading partner, fell by 12 percent in the first quarter compared to the previous year.
In order to create stronger investment incentives, Wansleben called for simpler depreciation and a reduction in bureaucracy. In hardly any other industrialized country would companies have to write so many reports and fulfill so many obligations to provide evidence.
There are also gloomy signals from the economy about research and development. A clear majority of 85 percent of the managing directors and self-employed see innovations as a decisive factor for the future of the business location. But only 25 percent still rate Germany as a “country of inventors”. More than 57 percent no longer have this impression. This was the result of a survey commissioned by the Association of Research-Based Pharmaceutical Manufacturers (vfa), which is to be presented on Wednesday at the Innovative Healthcare Day in Berlin.
A reduction in bureaucracy is required
When asked whether Germany was doing enough to secure its economic future, almost 91 percent of managing directors and the self-employed answered that this was not the case. Among all respondents, it was 84 percent. Around two-thirds of the population and more than three-quarters of managing directors are pushing for greater reductions in bureaucracy in order to secure prosperity. Other central recommendations are better investment conditions, the training and further education of skilled workers and a more successful distribution of wealth, for example through taxes. Interestingly, the demand “promote digitization” only ranks sixth.
The pharmaceutical and healthcare industries are currently still considered to be particularly strong in research. However, the managing directors and self-employed people are most likely to believe that mechanical engineering is capable of important innovations in the future. In the group of all respondents, the energy sector is at the forefront as a development driver, followed by electrical engineering. Above all, those surveyed expect well-paid jobs from the modern key industries. For the managing directors and the self-employed, “new ideas” are crucial.
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