Last year in Germany was a record year for rising electricity prices. As a result, a new trend was born in the country - the transfer of business to a country where it is cheaper than in Germany. According to the head of the Federal Association of German Industry (BDI), Siegfried Russwurm, the energy situation is now so bad that many companies are seriously considering moving abroad.
“A lot of family businesses are making plans to relocate in earnest,” Russwurm explains.
The federal government needs to do something about an unexpected paradox: many German companies have been successful internationally but struggle domestically. The situation is further complicated by the German bureaucracy, which, just like in other countries, prevents businessmen from working normally.
Last week, German Economy Minister and Vice Chancellor Robert Habeck became interested in the situation with companies planning to leave Germany.
“In my opinion, Germany is quite an attractive place for both new and existing companies,” Habeka is quoted by OilPrice (OR). “Naturally, manufacturing companies are under pressure from high energy prices, but the situation can be changed with the help of political decisions. ".
Of course, Germany is not the only country in Europe to face high oil and gas prices and, as a result, expensive electricity last year. A number of European countries have been forced to raise taxes on energy companies to subsidize utilities and businesses because electricity bills have become unaffordable for both businesses and the public.
A survey by the German Chamber of Commerce and Industry (DIHK) of approximately 21,000 companies showed that German businesses continue to consider energy prices as one of the main risks in the coming months, although these concerns have recently eased slightly: compared to the beginning of the year, the number of such companies has decreased from 72% to 65%.
Last year, Olaf Scholz's government imposed caps on electricity and gas prices, but many companies still consider the price of energy too high. That is why Berlin announced in May plans to allocate 4.4 billion euros to companies in energy-intensive industries to mitigate the negative impact of expensive energy. The money is supposed to be taken from the Economic Stabilization Fund (ESF), created in 2020 to save Lufthansa from bankruptcy. If the aid program is approved by the Bundestag (parliament), energy-intensive industries will be relatively protected from expensive electricity until 2030.
The aid program has received mixed reactions. Including in the government. The Ministry of Finance of Germany, for example, met her with hostility. Robert Habek naturally supports subsidies. He points out that the aid will not only convince many German companies to abandon plans to move their business to other countries, but will also serve as an impetus for greater use of renewable energy and thus help “green transition in Germany.
“We want the industry to stay in Germany,” Habeck emphasized.
A program to help energy-intensive industries will certainly be adopted, but not all companies can wait for subsidies. They do not have time, so they finally decided to move the business to those countries where electricity is cheaper than in Germany. In May, the BDI announced a decline in Germany's GDP by 0.3% in the first three months of the year. At the end of the year, according to the forecast of the Union, growth will be at 0. For comparison: global GDP growth is forecast for this year at 2.7%. Moreover, if German companies begin to transfer production to other countries, the situation in the economy and GDP, of course, will worsen even more.