High Energy Prices and Unreliable Supply Hinder German Companies
The high energy prices and lack of reliable energy supply are hindering the production and investments of German companies, with more and more industrial firms considering relocating abroad, according to a study reported by Reuters.
Industrial firms in Germany have been affected by the decline in economic activity, in the context of Russia’s invasion of Ukraine, while the decrease in energy imports from Russia has led to an increase in energy prices in 2022. Since then, prices have decreased, but are still high compared to other countries, as reported by Agerpres.
German Companies Consider Production Reduction or Relocation Amid Energy Price Concerns
A survey conducted by the Association of German Chambers of Industry and Commerce (DIHK) among approximately 3,300 companies shows that 37% are considering reducing production or relocating abroad, compared to a level of 31% in 2023 and 16% in previous years.
The Energy Crisis in German Industry
In 2022, a study revealed that approximately 45% of large energy-consuming industrial companies are considering reducing production or relocating abroad. The confidence in Germany’s economy regarding energy policies has been deeply affected, according to Achim Dercks, the Deputy Director General of DIHK. The government has failed to provide companies with reliable and affordable energy supply prospects.
More than a third of industrial companies in Germany are cutting back on investments in core processes due to high energy costs, and two-thirds say their competitiveness is at risk, the study shows. The measures presented last month by the German government to strengthen the country’s position as an industrial location have not been convincing enough, and no solutions have been presented.
Location is Key for Industrial Firms
When it comes to energy supply and prices, many industrial firms are facing challenges, according to Dercks. The location of a business is crucial for its success, he added. Recent government measures to reduce bureaucracy have not yet had a significant impact. Two-thirds of firms are asking for predictability, DIHK stated.
