Companies Exiting Germany Pose Threat to its Economy's Stability

04 Jan, 2024

A growing number of businesses are contemplating relocating jobs and production abroad, according to a study by the Federation of German Business (BDI).

The study reveals that 16% of medium-sized companies have already initiated steps to move parts of their business, while an additional 30% are considering similar measures. Concerns about the German economy are intensifying, with two-thirds of companies citing energy and resource prices as pressing challenges.

BDI President Siegfried Russwurm emphasizes the need for competitive electricity prices, stating that the green transformation of businesses will falter without reliable and permanent cost reductions. These concerns echo those in the wake of the US's $500 billion Inflation Reduction Act (IRA), which offers subsidies for the green industry. Tesla adjusted plans for a battery factory near Berlin in response to the IRA and rising energy prices, opting to focus on the US market.

Worries about Germany's economic competitiveness persist, fueled by the European Commission's prediction of the country among the eurozone's slowest-growing economies in 2023. High energy costs and EU carbon prices contribute to undermining Germany as a favorable business location. To address these issues, German Economy Minister Robert Habeck proposed measures to reduce electricity prices, including temporary subsidies and a 'Carbon Contracts for Difference' scheme. While the BDI acknowledges these steps, it advocates for more comprehensive reforms to safeguard Germany's economic landscape.

Related News

Interview