The bad news for Germany as a business location is multiplying: Biontech, the innovative miracle known worldwide, is relocating its cancer research to England. The most valuable Dax group, Linde, is withdrawing from the Frankfurt Stock Exchange and will be traded in New York in the future. High energy prices are making it difficult to manufacture many basic products. The list goes on.
Many ranking lists reflect the declining attractiveness of Germany as a business location. Other major European economies are no better off, and some are even worse off.
One of Germany’s and Europe’s main reactions to these developments is as predictable as it is wrong: massive additional public funds would have to be made available. Irrespective of problems such as rising energy prices or the IRA, the call for more state funds is once again being heard.
One is inevitably reminded of the bon mot that the only thing left to do is find the right problem for the already established solution of spending additional public money.
Economic policy should once again take precedence over fiscal policy
Apparently, the defusing of acute challenges such as the energy crisis obscures the view of longer-term challenges. Because as right as it is to put together short-term state rescue packages against the energy crisis, Germany and Europe will not be able to fight permanently higher energy prices with public funds.
The continent does not suffer from a lack of government funds. For example, the Next Generation European Union package put together in response to the corona crisis is still well filled. Therefore, when facing new challenges, one should always first think about how existing funds can be reallocated – and not constantly call for new ones.
In principle, economic policy in Europe should increasingly take the place of fiscal policy, and this applies not only to the completion of the internal market in the areas of capital markets, energy and digitization. It applies at least as much to a long-term strategy for the procurement of critical raw materials.
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And it also applies to the competition for the brightest minds in the world. Significantly more talented Indian women and men study in the USA than in Europe. After successfully completing their studies, they are key drivers of innovation and business start-ups in the USA.
These positive examples attract more students and fuel a self-reinforcing cycle. Europe, and Germany in particular, must finally face up to this challenge – for example through a clever immigration policy and convincing location marketing.
Groundbreaking findings from European and German basic research are often not made ready for the market here.
(Photo: imago stock&people)
Germany and Europe are still leaders in many areas of basic research, such as life sciences or medicine. However, the groundbreaking findings from this basic research are often not brought to market maturity here, but in other regions of the world. Accordingly, the European markets for goods, labor and capital benefit little from this.
What we need is networking between the various players, more openness to new technologies and internationally competitive regulation.
There are opportunities in the climate crisis and in the loss of biodiversity
Germany and Europe have played a leading role in combating the corona pandemic. Vaccines were developed here and exported all over the world. Opportunities of this kind are now available when it comes to the big issues of the climate crisis and the loss of biodiversity.
The combination of bright minds, technology and capital can transform new scientific findings into marketable products that not only bring economic success, but also contribute to overcoming the great challenges of our time. However, this requires a concentration on the essential regulatory measures such as an appropriate pricing of CO2 – and not a complex, widely ramified bureaucratic monster that leaves everyone involved helpless.
The current bad news does not mean the end of the West. Germany and Europe have a strong base, but the location must be made more attractive in the global competition for minds, ideas and innovations.
Only in this way can Europe maintain its prosperity and play an important role in the major geopolitical challenges of the present. It is time to divert the calls for more and more state funds to a long-term European economic policy.
The author: Jörg Rocholl is President of the European School of Management and Technology Berlin.
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