The German economy was affected by the Russian-Ukrainian war. One of the country’s strongest industries, automotive, has even been placed under a strict operational warning.
The President of the Automotive Industry Association, Hildegard Muller, said that the future of the German automotive industry was under threat because of energy prices which she said were too high. It is known that energy prices in Germany and Europe have soared after the war.
“Germany is losing dramatically its international competitiveness as a location for the automotive industry due to soaring energy prices,” said Muller in an interview with the head of Microsoft Germany, Marianne Janik, Thursday (7/9/2023), quoted by Russia Today (RT).
According to Muller, soaring energy prices have become “poisonous” for the country’s medium-sized suppliers. They warned that investment would no longer flow to Germany but would instead shift to other European Union (EU) countries or to the United States (US).
In addition to energy prices, Muller complained about over-regulation of the car industry, delays in political decision-making and a lack of legal framework for future reforms, especially for technology products such as artificial intelligence.
Muller’s statement came shortly after the president emeritus of the Ifo institute, Hans-Werner Sinn, said that Germany was once again the “sick man of Europe”.
The nickname “sick man of Europe” has reappeared in recent weeks as manufacturing production in the Rhine country has declined. This label was originally used to describe the German economy in 1998 as it faced costly post-reunification economic challenges.
“This is not a short-term phenomenon,” Sinn told CNBC at the Ambrosetti Forum in Italy.
According to a research note released in August by Berenberg, Germany could lose 2% to 3% of its current industrial capacity as companies move operations to countries where gas and electricity are cheaper, such as the US or Saudi Arabia.
“Current policy uncertainty and disappointment with the government’s half-baked plans are not structural factors that are likely to hamper the German economy in the long term,” concluded Berenberg Chief Economist Holger Schmieding.
Source : CNBC
