Companies increasingly cite energy costs, bureaucracy, taxes as reasons to invest abroad – media report

German companies increasingly cite high costs as a reason for their investments abroad, a survey by the Association of German Chambers of Commerce and Industry (DIHK) has found. In the survey seen by business daily Handelsblatt, the companies stated that 32 percent of new investments made abroad are to save costs. Ten years ago the share of investments made abroad for this reason stood at 20 percent. Handelsblatt writes that high energy prices, bureaucracy and taxation have raised concerns that companies could prefer investments in China or the U.S.. The survey results are “a wake-up call for better conditions” for Germany as a location for production, DIHK head Martin Wansleben said. "Policymakers have to provide appropriate guidelines, for example regarding taxation," he argued.

In a different statement, the DIHK said the country’s nuclear exit on April 15 is coming at the wrong time. “We’re not out of the woods yet with respect to supply security,” DIHK president Peter Adrian said. “In spite of lower gas prices, energy prices for most companies remain too high in Germany,” Adrian argued, adding that this would remain a long-term problem. For the longest time the risk of energy shortages had been unheard of in Germany, but now it has become “a disadvantage that cannot be compensated for in an industrial country.” Letting the remaining three nuclear plants run “until the end of the crisis” would be the preferred option of many companies and one option to help avoid energy price hikes, he said.

Industry representatives have warned that the energy crisis fuelled by Russia’s war on Ukraine could lead to looming deindustrialisation in Germany, as companies struggle to remain competitive due to rising costs for gas and electricity. Thanks to energy saving efforts by industry and private households, the country managed to avoid a supply bottleneck in the winter of 2022/2023, while wholesale market prices had largely reached pre-war levels again by spring 2023. However, generous investment support in other regions of the world, especially China and the U.S., has led to calls among European industry representatives to introduce similar measures in the region to avoid large-scale relocation of production facilities.