Every fourth enterprise may move abroad due to inflation and soaring energy costs, a German industry group warns.
One in four German companies is considering moving production to other countries amid the energy crisis, Tanja Gönner, CEO of the Federation of German Industries (BDI), told Die Welt am Sonntag news outlet.
“The high energy prices and the weakening economy are hitting the German economy with full force and are placing a great burden on our companies compared to other international locations. The German business model is under enormous stress…Every fourth German company is thinking about relocating production abroad,” Gönner stated.
Germany’s energy-intensive chemical industry is particularly affected by the crisis, Wolfgang Grosse Entrup, CEO of the German chemical industry association (VCI), told the news outlet.
“The brutal energy prices are knocking us out…Without a functioning price brake, the government is willfully accepting deindustrialization,” he warned, adding that if the chemical industry fails, other industries will follow, which “could be the knockout for Germany as a business location.”
The report says German companies are suffering a variety of problems, including high energy prices, disrupted supply chains, and even the aftershocks from China’s rigid crackdown on the Covid-19 pandemic.
The US government’s recently-passed Inflation Reduction Act, which provides $386 billion in subsidies for new technologies and a sustained expansion of American industry, is also seen as a major risk. The German economic ministry recently warned that the unilateral US move demands a similar response from the EU.
“We will have to give our own European response that puts our strengths forward,” the ministry said, adding that in addition to subsidies, the German industry needs “structural reforms, above all the acceleration of planning and approval procedures and de-bureaucratization.”
This article was originally published by RT