Thousands of small and medium -sized companies that make up the backbone of the German economy warned this week that the country lost its advantage, as the central bank in the country indicated a threat of recession over Germany in the first three months of 2024.
“Every day, Germany loses the ability to remain internationally competitive,” read an open letter to the Government signed by 18 associations represented by companies, in industry in the range from technology to transport to taxi companies.
The aim of the letter was to invite the legislators to overcome partisan struggles that block the adoption of the law intended to provide taxes for investment that accelerate the transition to the green economy. But a clean statement marked a list of problems facing companies, including high energy prices, lack of work, slow efforts to digitize bureaucracy and high taxes. “The economic fall is homemade,” it was said.
These strains are reflected in a report published on Monday by the German Central Bank, Bundesbank, who said that the country’s economy, the largest European, was ready to reduce in the first three months of the year. After a contraction of 0.3 percent in the last months of 2023, the second consecutive fall would land the ground into a technical recession.
Bundesbank cited a poorly export market, consumers who are aware of prices that continue to be careful about the consumption and lack of investment by companies scared of higher borrowing costs.
The Minister of Economics, Robert Habeck, called last week with a state of economy “dramatically bad.”
On Wednesday, he handed over the Government Economic Report for 2024, which included projections of only 0.2 percent of annual growth, reduced from a 1.3 percent of the expansion of 1.3 percent of last year. “We’re coming out of the crisis more slowly than he hoped,” Mr. Habeck said.
The Ministry of Mr. Habeck has made legislation, inspired by the US Law on Reducing Inflation, to ensure billions of tax relief companies investing in green energy. The idea is to attract many German companies that transferred their investments to the United States.
Corporation taxes in Germany are among the highest in Europe, with more than 29 percent, compared to about 25 percent in neighboring France and the Netherlands. .
The Parliament’s lower home passed the law in November, but members of conservative opposition parties block their final passage through the upper home. They point out that the application of the proposed law will fall into states, which lack enough resources. They also demand that the planned reduction of subsidies for agricultural diesel fuel – a proposal that he sent farmers to the streets in protests throughout the country last month – should be rejected in exchange for their support.
The public appeal of business associations is an unusual campaign for groups that usually remain in the background. It reflects the frustration that many small and medium -sized companies – known as Mittelstand – because of the willingness of the Government spent billions to attract large companies such as the Intel chips manufacturer or the Northvolt battery manufacturer, said Jens Südekum, a professor of economics at Heinrich Heine University in Düsseldorf.
“That’s why this law is so important – it’s an instrument for everything,” Mr. Südekum said. “For small and medium -sized enterprises that really matters.”
