Investment lull exacerbates economic crisis

Investment lull exacerbates economic crisis

The most recent talks between Chancellor Olaf Scholz and representatives of leading economic associations have brought little improvement and have instead highlighted the problematic relationship between government and business. Business representatives expressed disappointment at the Chancellor's apparent lack of interest in their concerns. This reaction is not new, as there were already calls for a redirection of economic policy at the beginning of the year. The lack of investment incentive could become even worse, as calculations by the Kiel Institute for the World Economy (IfW) show.

The stagnating investments in Germany are in stark contrast to other business locations worldwide that are recording positive development. Tanja Gönner, Managing Director of the Federation of German Industries (BDI), is pushing for an urgently needed investment offensive to stimulate the economy. Although the situation does not appear dramatic at the moment, it has the potential for a crisis by the end of 2025 if comprehensive measures are not taken.

The IfW forecast also shows that the investment weakness is not limited to Germany alone, but extends across the entire euro area. Among the few positive aspects, Germany's position in the field of renewable energy stands out, representing a potential opportunity for future investments. Experts emphasize the importance of increasing investment in these technologies, especially given the upcoming digital and climate-neutral transformations. Securing investments in climate-neutral technologies could be a way for Germany to ensure long-term economic stability and growth.