DIHK Business Survey Autumn 2019

Oct 29, 2019

Economy on a descent

Statement on the Business Survey Fall 2019
DIHK President Eric Schweitzer

Since the financial crisis of 2008/2009, the DIHK has not received such pessimistic answers from the companies. In normal times, we actually have an average export growth of 5.5 percent. For exports, we expect stagnation in 2020 – actually somewhat worse (minus 0.5 percent). For our economy, with its strong industry, this is a huge challenge. This is all the more so, as currently creates a Gemmgeage, which is characterized on the one hand by a normal economic slowdown. On the other hand, there are factors that are technologically and politically conditioned.

All in all, the DIHK expects GDP growth of 0.4 percent in 2019, after having started last autumn with just 1.7 percent from the perspective of the past. Thanks to so-called calendar effects (4 more working days), it could reach 0.5 percent growth next year. We would like to join the ranks of those who are more optimistic. Unfortunately, the estimates of 28,000 companies provide us with no arguments.

Especially in the industry, the situation and the expectations worsen considerably. Meanwhile, the external headwinds hit the breadth of industry. As a result, domestic demand is also increasingly weakening. The slowdown is now leaving visible spurs on industry-related service providers and wholesalers. In addition to the worries about demand for companies, there are uncertainties due to economic policy conditions at home. This applies in particular with regard to climate and energy policy.

After all, retail and tourism continue to look for stable businesses. Both industries benefit from the domestic consumption, which has been stable to date. In foreign business, however, growing protectionism in numerous markets, escalating trade conflicts and Brexit are causing very weak business expectations. The balance of export expectations slips clearly into negative territory. The value was only too low, with the exception of the financial crisis, in 1993. Nearly every second export company now describes sluggish demand for foreign countries as a risk for future business development.

The gloomy export prospects and tangible uncertainty in many industries are increasingly reflected in the plans of the companies in this country. For example, the investment and employment intentions of companies are falling for the fifth time in a row. TOP business risk for companies remains the shortage of skilled workers – despite slowing economic momentum.

Overall, the economic development presents a complex picture. In addition to the uncertainty of companies and the slowdown in foreign trade, more and more structural challenges are weighing on the economy: digitization, mobility of the future and climate policy.

In view of the worrying economic development, the Federal Government should act urgently. There are a whole series of measures. For example, we miss an initiative to revive the WTO. Especially since we have medium-sized companies like no other country in the world that are internationally active.

Our country must take action. Let me remind you that the last corporate tax reform was more than 10 years ago. For example, there are a number of tax measures that could provide a boost for businesses. In the short term, this includes the return to degressive depreciation, an increase in the depreciation limit for low-value assets, and the simplification of the reinvestment reserve for private companies.

In view of the structural challenges facing the German economy, we must work intensively to make sustainable improvements to our location. Here priorities must be set. Acting instead of waiting. Spaces in public households are available. An important signal would be an internationally competitive corporate tax rate of 25 percent. More than overdue is the abolition of the solidarity surcharge for all companies and the rapid introduction of low-bureaucratic tax research funding.

Germany needs to invest more in smart minds and in a modern infrastructure. Rolling up your sleeves and acting is the order of the day. After all, digitization is a great opportunity for less bureaucracy, more efficient operations and more speed in Germany. Imagine, next year, the opening of the BER would be announced, completed the broadband expansion in Germany and completed the EU internal energy market. Al-them topics where Germany and Europe can act directly themselves and are not dependent on the communication with third parties.

In order for the climate protection program that has now been decided not to further slow down the economy, companies must be relieved of the additional costs of carbon pricing. This applies in particular to the electricity price. Therefore, the coalition still has to significantly reduce its EEG discharge. Companies that are in international competition or energy-intensive should also be relieved. That would provide scope for investment. If the politics of this question does not take more intense, Germany loses its attractiveness as an investment location. At the same time, we run the risk of emissions being successively relocated abroad without any overall CO2 savings.

Download the Autumn 2019 survey
Download the Autumn 2019 forecast