It’s been like this for months now. First, associations and economists publish gloomy forecasts. Then it turns out better than expected. Much better sometimes.
But if you talk to company bosses, analysts or investors these days, a completely different picture emerges. Marketing budgets, research expenditure, major investment projects in Europe: everything is checked twice, weighed and – if at all possible – postponed. While some economists tick off the downturn, many corporations always plan with a lull. You can also put it this way: the mood is worse than the situation.
There are initially very obvious reasons for this: Nobody knows, for example, how the war in Ukraine will develop. It is also not yet clear to what extent the central banks’ necessary fight against inflation will slow down the economy.
One thing weighs heavily on the German economy: Germany as a business location.
But there is another, deeper reason for the pessimism. Hardly a conversation goes by with top executives in German business without the location being discussed at some point, the future of Germany’s industrial business model, the constantly growing bureaucratic burden – and the question of what role Europe plays between the two high-tech superpowers China and USA will play in the future.
The economy does not primarily need new subsidy packages, but a location strategy.
This is the root of the pessimism. There is also another reading of the current numbers: that they are not much more than a sham boom. Because the medium-term prospects are actually not exactly outstanding.
Energy will remain expensive in Europe in the long term, corporate taxes are high by global standards, and world trade, on which German companies are particularly dependent, is past its best.
Added to this is the demographics, which are developing unfavorably, particularly in Germany. Last year saw more vacancies than ever before, and that was just the beginning. By 2040, around four million people will retire with few replacements. The economy will not only have to get used to not being able to fill vacancies for months.
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Now one cannot say that all these crises in Berlin or Brussels are being ignored. The Federal Government and the EU Commission have developed so many aid packages in recent years that there is not enough space here to list them all. It is often overlooked that Europeans are spending even more money on industrial restructuring than Americans. And yet it looks as if the US is coming through the crisis much faster than the Europeans.
The government aid packages will only have a short-term effect at best
This is also due to a fundamental misunderstanding in Europe: the economy does not primarily need new subsidy packages, but a location strategy, an answer to the question of why companies should invest on the European continent and not in the USA or China. The political support packages increase consumption in the short term and thus also growth, but they do not increase the growth potential of the economy.
The history of relations between business and politics in Europe is in any case a long history of misunderstandings. While politics and business often sit around a table in the USA and discuss problems together, in Germany they all too often talk past each other. This is also due to the fact that the exchange between the federal government and companies is less cultivated.
The history of economic and political relations in Europe is a long history of misunderstandings.
There are official summits in the Chancellery where the automotive industry, for example, meets. Or topic-related rounds in the Ministry of Economic Affairs. And then there are the ministerial trips, which often include business representatives. But there are hardly any regular, semi-official rounds in which people speak openly in Germany.
The USA shows how business and politics understand each other
It’s completely different in the USA. This is where the top executives of the large corporations meet regularly with members of the government to discuss the most important economic policy issues. The US State Department, for example, asks the CEOs quite bluntly how the US government can help companies to be successful internationally, reports one who attends regularly.
Such a semi-official exchange at eye level is also needed in Berlin and Brussels. Less to influence the other side, as such rounds are sometimes assumed. But to create mutual understanding.
The problems – from the lack of skilled workers to trade conflicts to technological location issues – are so complex that neither politics nor business can solve them alone. And who knows, maybe just such a round will turn into a new project of confidence.
More: The good years for Germany as a business location are over