Loading Now
×

Economic barometer gives Germany a catastrophic rating

catastrophic rating

German companies prefer new locations abroad: High subsidies attract!

A quarter of German companies consider relocating their production abroad. A new survey by the market research institute Kantar Public and FTI-Andersch among 150 German companies shows that Germany’s location has developed negatively in the last two years. The alarming results show that a good quarter of the surveyed companies even consider relocating their production abroad. The future of Germany as a business location is in danger.

Only just over a third expect an increase in sales. Two thirds consider Germany economically no longer attractive. The energy supply is now rated particularly poorly with a grade of 4.0, which is equivalent to a D in the American grading system. The question point on state regulatory measures and bureaucracy also receives a grade of 4.0.

Andersch-1024x690 Economic barometer gives Germany a catastrophic rating
A page from the Survey in German (Source: FTI-Andersch – Supply Chain Barometer 2023/17 U.S.C. § 107 “Fair Use”)

German firms want to invest abroad

63% of the surveyed companies have location expansions abroad in mind. Asia and Eastern Europe are now in high demand.

Other sources show that the US ‘Inflation Reduction Act’ (IRA), with a volume of $433 billion, diverts investments from Germany and Europe to the States. Matthias Krämer, head of foreign trade policy at the Federation of German Industries, reports earlier that there had already been an increased interest of German companies in the US as a business location before the introduction of the ‘Inflation Reduction Act’ (IRA) in the US. With the incentives of the IRA, this interest has now increased even further. Prof. Mariana Mazzucato, Professor of Economics of Innovation & Public Value and Founding at University College London, recommends steering the market based on strict conditions: It has to be ensured that the money goes into the right areas, such as promoting climate protection or fair working conditions. Stakeholder value and ESG principles are considered guidelines for such politically supported conditions in the global economy today. She cites green steel as an example of how sustainable industrial policy is possible. ESG stands for Environmental, Social and Corporate Governance. These are criteria by which the economy is to be politically steered.

“What we are seeing here is a major reorganization of production locations and networks worldwide,” says Christian Säuberlich in reference to the study. He is senior partner and chairman of the board of FTI-Andersch. “Countries like the USA have succeeded in increasing their own attractiveness as an investment location through indirect subsidies such as the Inflation Reduction Act or China through targeted promotion of foreign investment. For many German companies, it is an economic necessity to diversify and invest internationally even more in the future if they want to compete in the global market.”

Economic barometer gives Germany a catastrophic rating

China remains an attractive location for many companies, as the survey shows. Half of the surveyed companies consider China to be a very attractive location, both now and in the coming years. The German federal government recently presented a China strategy that evaluates the People’s Republic of China more negatively than in the past, for political reasons. Companies are asked to reduce their risks in China business, i.e., to divest there.

The new China strategy of the German federal government is formulated against the background of Scholz’s speech for an ‘epochal shift’ (“Zeitenwende“) in German foreign policy and a new US doctrine that emerged after the Ukraine war, which US President Joe Biden described on March 21, 2022 at the “Business Roundtable” in the White House in front of CEOs of leading American companies. There, he declared the end of the world order that has existed since World War II. “There’s going to be a new world order out there, and we’ve got to lead it,” Biden says. “We’ve got to unite the rest of the free world in doing it.”

worldorder Economic barometer gives Germany a catastrophic rating
US-President Joe Biden in a speech in the White House (Source: White House/17 U.S.C. § 105 “Public Property”)

Header image: German economy minister Robert Habeck of the Green party (Source: Symbolic collage. US Department of State 7 February 2023/17 U.S.C. § 105 “Public Property”, 652234/Pixabay)

Share this content:

10 comments

comments user
Haircuts

Pretty section of content. I just stumbled upon your web site and in accession capital to assert that I get in fact enjoyed account your blog posts. Any way I抣l be subscribing to your feeds and even I achievement you access consistently fast.

comments user
Trade Iraq Direct

Navigating the legal and regulatory landscape of Iraq can be challenging. BusinessIraq.com provides crucial insights into business legislation, tax laws, and regulatory reforms. We offer clear explanations of complex regulations, analyzing their impact on business operations and investment decisions. Stay up-to-date on the latest legal changes, understand compliance requirements, and mitigate potential risks with our detailed coverage. We aim to help businesses operate within a framework of legality and transparency.

comments user
Entertainment

What an interesting read! It’s concerning to see how Germany’s economic attractiveness seems to be declining from the perspective of these companies. The poor ratings on energy supply and bureaucracy really highlight the structural challenges the country is facing. It’s no surprise that so many companies are considering expansions abroad, especially to Asia and Eastern Europe. The impact of the US Inflation Reduction Act is also fascinating—seems like it’s pulling investments away from Germany even more. I wonder, though, do you think Germany’s China strategy could backfire in the long run, given how many companies still view China as a key location? And what’s your take on Professor Mazzucato’s approach—do you think steering the market with strict conditions is the way forward? Let’s discuss!

comments user
Лечение+бесплодия

The data presented here paints a rather concerning picture of Germany’s economic attractiveness, especially in terms of energy supply and regulatory measures. It’s striking that so many companies are considering expanding abroad, particularly to Asia and Eastern Europe, which suggests a lack of confidence in the domestic market. The impact of the US Inflation Reduction Act also seems to be a significant factor in diverting investments away from Europe, which raises questions about how Germany can compete with such incentives. Mariana Mazzucato’s emphasis on ESG principles and sustainable industrial policy is refreshing, but I wonder how feasible it is to implement such guidelines on a global scale without causing further economic disparities. It’s also interesting to note China’s continued appeal despite the German government’s more critical stance—what does this say about the disconnect between policy and business reality? Do you think Germany can reverse this trend, or is it too late to regain its position as a top business location?

comments user
Business

It’s concerning to see that Germany is losing its economic attractiveness, especially with such poor ratings for energy supply and bureaucracy. The shift of investments to the US due to the IRA is understandable, but it raises questions about Europe’s ability to compete. Asia and Eastern Europe becoming hotspots for expansion makes sense, but what’s the long-term plan for Germany? Are there any concrete measures being considered to reverse this trend, particularly in energy and regulatory reforms?

I also wonder how the German government plans to balance its critical China strategy with the fact that half of the companies still see China as a very attractive location. Isn’t there a risk of creating a disconnect between policy and business interests? And while ESG principles and sustainable industrial policies like green steel sound promising, how effective can they really be without stronger global coordination? What’s your take on this—do you think Germany can adapt quickly enough to retain its appeal?

comments user
Technology

Only a third expecting sales growth is quite concerning. It’s alarming that two-thirds find Germany economically unattractive, especially with energy supply and bureaucracy scoring so poorly. The shift of investments to the US due to the IRA is a significant blow to Europe’s competitiveness. It’s interesting how Asia and Eastern Europe are becoming hotspots for expansion—what’s driving this trend? Prof. Mazzucato’s emphasis on ESG principles and green steel is commendable, but how feasible is this in practice? China’s continued attractiveness despite geopolitical tensions raises questions about the balance between economic interests and political concerns. Do you think Germany’s China strategy will deter companies from investing there, or will economic benefits outweigh the risks?

comments user
Forum

The text highlights significant concerns about Germany’s economic attractiveness, particularly in terms of energy supply and regulatory bureaucracy. It’s alarming to see such a low rating for these key areas, which are crucial for business growth. The shift of investments to the US due to the IRA is understandable, given the incentives, but it raises questions about Europe’s ability to compete globally. Mariana Mazzucato’s focus on ESG principles and sustainable industrial policy, like green steel, is inspiring yet challenging to implement effectively. The ongoing allure of China as a business location, despite geopolitical tensions, indicates the complexity of global economic dynamics. What specific measures could Germany take to regain its economic appeal and retain investments? It feels like the country is at a crossroads—will it adapt or continue to lose ground?

comments user
Business

It seems the text is in English, so I’ll respond in English:

This survey sheds light on some concerning trends for Germany’s economic attractiveness. It’s surprising to see how poorly energy supply and bureaucracy are rated, both scoring a 4.0—equivalent to a D grade. The shift of investments to the US due to the Inflation Reduction Act is a significant development, especially with the increased interest in the US as a business location. However, it’s intriguing that China remains highly attractive for many companies, despite the German government’s more negative stance. The emphasis on ESG principles and sustainable industrial policy, like green steel, is commendable, but I wonder how effective these measures can be in practice. How do you think Germany can regain its economic appeal amidst these challenges? Do the benefits of the IRA outweigh the potential downsides for Europe? It’s a complex issue, and I’d love to hear more perspectives on this.

comments user
Personal Finance

It seems like Germany is facing significant challenges in maintaining its attractiveness as a business hub. The survey results highlight concerns about energy supply, bureaucracy, and the impact of the US Inflation Reduction Act. It’s interesting how Asia and Eastern Europe are gaining traction, but China still remains a top choice for many companies. The emphasis on ESG principles and sustainable industrial policy, like green steel, is a positive step, but I wonder how effectively these measures can be implemented globally. Do you think Germany can regain its competitive edge, or is this a sign of a broader shift in the global economy? It would be great to hear more about how smaller companies are navigating these changes compared to larger corporations. What’s your take on the long-term impact of these trends?

comments user
Trump

Interesting analysis of the current economic landscape. It’s concerning to see Germany’s economic attractiveness declining, especially with energy supply and bureaucracy being major pain points. The shift of investments towards the US due to the Inflation Reduction Act is a significant development, and it raises questions about how Germany and Europe can counter this trend. The focus on ESG principles and green initiatives, like green steel, seems promising, but is it enough to retain businesses? China’s continued attractiveness despite geopolitical tensions is also noteworthy—how does this align with Germany’s new China strategy? What do you think are the most urgent steps Germany should take to regain its economic appeal?

Post Comment