Even before his appearance, the chancellor had suspected that it would not be a home game for Olaf Scholz at Industry Day. For months, German industry has been complaining about the ever-increasing locational disadvantages, such as high energy prices, and many companies are openly threatening to relocate or at least only want to open new factories abroad in the future.
Accordingly, the polite praise from the President of the Federation of German Industries (BDI), Siegfried Russwurm, was brief at the beginning of his speech: The German government is supported in its help for Ukraine and it is also welcomed that the government is opposed to a complete decoupling from China have decided. Nevertheless, the “system competition between China and democratic states” is increasingly coming into focus.
But then Russwurm got down to business: Germany has fallen further behind in comparison to other economic regions, stated the head of the industry lobby. “Looking at the realities gives rise to many concerns,” Russwurm said. “We currently see the country facing a mountain of growing challenges.” Although the Chancellor announced a new economic miracle, two of the three governing parties are instead discussing tax and duty increases.
More about the economy in Germany
The motive for the speech by the top industry representative is clear: Germany must act quickly, but the government has so far mainly talked. Instead of the five new wind turbines required, on average only one was built in the past few months. “The delta between ambition and practical implementation is getting bigger every day,” criticized Russwurm.
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He agrees with the Chancellor’s analysis when he says that Germany has “walled itself in with regulations”, but now the announced countermeasures must be implemented. “Much of what you say is not reflected in the actions of the federal government,” Russwurm stated.
Even if some companies in the industry are still doing well, the reluctance to invest in Germany is increasing. “At the moment, more and more companies, including small and medium-sized enterprises, are looking to relocate part of their value creation away from Germany,” says the BDI President. Although there is agreement on the goal that industry wants to switch to climate-neutral production, the government must quickly create the conditions for companies to be supplied with energy at competitive prices. “The electricity has to flow 24 hours a day – even when it’s dark,” warned Russwurm.
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Not only would power grids have to be expanded quickly, but new power plants would have to be planned and built. This is going way too slowly. “We cannot shoulder the energy transition with castles in the air and PowerPoint slides,” said Russwurm.
At the same time, clear priorities must be set for this. “Our country has a long agenda, there is much more catching up to do than opportunities and resources,” said the BDI President. The principle of “head against the wall” leads “to no good”. “We have to prioritize what is urgent and what can be postponed, what we can afford and what we have to do without,” says Russwurm.
At least on this point, the Industry President agreed with the Federal Chancellor. But Scholz did not want to leave the responsibility for the long list of pent-up tasks alone on the government.
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Sharp criticism from the industry
The question arises as to “why so much has been left undone,” admitted the Chancellor. But even the economy did not push for the necessary changes for a long time: “The status quo was quite popular with many companies,” Scholz Russwurm reminded from the stage.
We are now in “extraordinarily stormy and challenging times”, after a phase of fairly comfortable framework conditions, money had cost nothing for a long time, inflation was low. “It was actually clear that such an exceptional period would not last forever,” said the Chancellor.
But in the meantime one has “gone from talking to action”, and one has also “avoided all the horror scenarios that were discussed last year,” said Scholz. There was no shortage of gas, a deep recession was avoided.
Three priorities in the budget, otherwise you save
But that was also bought with large aid packages in the past crisis years. That was right, but: “It’s just as right that we don’t let this exceptional situation become the norm.” The fact that you can now save again and not afford everything is “perhaps getting used to after the exceptional years,” says Scholz.
He named three priorities on which the next federal budget will be based: the security of the country, the transition to a climate-neutral industrial nation and the preservation of social cohesion in Germany.
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But this prioritization also means: “Some subsidies and some funding programs will be put to the test,” said Scholz. At the same time, one should not see the future of the country too negatively. Germany is developing into a sought-after location for semiconductor production in Europe. “Everything is heading towards Germany right now, that’s good news,” said the Chancellor.
The problems that have caused the traffic light coalition to stagger from one crisis to the next, especially in the past few weeks and months, are nothing more than a side note for Scholz. “It is obvious that, after years of stagnation, this will not happen without crunching,” said the Chancellor. “We got the corner just in time and now it squeaks every now and then because the corner is so sharp.”
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