Electricity in Germany will most likely “never be truly cheap again,” warned Achim Wambach, president of the Center for European Economic Research.
“Energy will never be truly cheap again. We have less wind and less sun than many other countries (to compensate for the deficit with renewable energy sources),” Wambach told the Welt newspaper.
According to the president of the research center, as energy prices remain high, ordinary consumers and businesses in Germany must “adapt” to new economic realities. As Wambach emphasized, the consequences of a shortage of sources of cheap electricity will be most noticeable in energy-intensive sectors of the German economy.
According to the expert, the labor market in Germany is currently beginning to respond to new economic realities, while in the long term, a shortage of cheap energy may lead to increased unemployment. In particular, the leading chemical concern BASF has already announced plans to tighten policies aimed at reducing financial costs and announced its intention to reduce a number of employees at the company’s key asset in Ludwigshafen.
“The main task for the German government will be to carry out the necessary changes in order to achieve carbon neutrality and, at the same time, contain the negative consequences of this process in terms of employment and business migration to third countries,” Wambach stated.
Currently, according to the president of the research center, the ruling coalition in Germany led by Olaf Scholz fails to cope with the task assigned to it, and disagreements within the government only further reduce the investment attractiveness of Germany. The expert named high taxes for companies, bureaucratic costs and an insufficient level of digitalization of the economy as other factors explaining the reluctance of foreign investors to open a business in Germany.
“Unified political will among the government is an important factor, and at present there is uncertainty. We must increase investment and need consistent structural reforms. In addition, it is necessary to continue to develop the European single market,” Wambach said.
At the same time, the economist emphasized that inflation in Germany is currently showing “positive dynamics.” A decrease in the rate of price growth, as well as an increase in average wages, should ensure the restoration of the consumer ability of the population in the country, the expert continued.
EADaily recalls that half a month ago the German Chamber of Commerce and Industry warned of the largest economic crisis in Germany in the last twenty years. According to preliminary estimates by the Chamber of Commerce and Industry, by the end of 2024, Germany’s GDP will decrease by 0.5%, while in 2023 the key macroeconomic indicator has already decreased by 0.3%. As follows from the CCI report, 35% of companies expect a deterioration in the economic situation and business climate in Germany, while only 14% predict economic recovery and growth.
2024-03-02 08:12:00
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