Anticipation of Progress in Economic Measures
Gearing up for a Change:
In the face of an economic slump, the German chemical industry is pinning hopes on a shift in power post the early federal elections in February. As per the German Chemicals Industry Association (VCI), boosting Germany's competitive edge is paramount, with tackling bureaucracy, slashing taxes, and ensuring economical energy as top priorities.
Markus Steilemann, VCI president, recently spoke in Frankfurt, asserting that the climate for dramatic political reforms appears promising. He voiced optimism that Germany will form a stable government geared towards implementing necessary reforms and stimulating the economy. Germany can ill-afford a period of collective fatigue, and even as companies brace themselves to confront challenges head-on, they also seek enhanced conditions.
Bureaucratic Nightmares:
Excessive bureaucracy and agonizingly slow approval processes have emerged as Germany's biggest challenges as a favorable business location, as per the VCI. Although energy prices continue to present concerns, according to Steilemann, electricity prices have settled close to early 2021 levels. There's still room for improvement, but the steep price hikes no longer stand as the primary factor influencing location decisions. Establishing supply security and striking a balance between eco-transformation and economic prosperity take center stage. Steilemann urges the government to adopt a pragmatic approach to achiev ing the cost-effective rollout of grid expansion.
The VCI advocates for corporate tax reform, aiming to significantly lessen the tax burden. Steilemann supports the abolition of the solidarity surcharge and incentives for investment. The government must prioritize spending, ensuring no cuts in infrastructure, security, or education. Alongside the debt brake, binding fiscal rules, and a national balance sheet are crucial for greater transparency in government expenditure.
Skimpier Profits at Home:
With Donald Trump's impending presidency precipitating global protectionism and planned tariffs, the VCI is yet to ascertain the chemical industry's destiny. As a transnational force, the industry could flourish if regional markets strengthen.
Despite the resilience of the German chemical industry and the enduring relevance of its products, Steilemann concedes that profits are primarily earned abroad, rather than within Germany and Europe. VCI member companies are progressively minimizing their domestic investment budgets and establishing new plants overseas, focusing on the U.S., Mexico, China, and Southeast Asia. "We invest where demand and growth are compelling," says Steilemann.
A VCI survey revealed a mixed industry outlook: around a quarter of companies anticipate increased profits by 2025, another 26% envision stable earnings, while 46% foresee a decline.
- The German Chemicals Industry Association (VCI) prioritizes boosting Germany's competitive edge, which includes tackling excessive bureaucracy and agonizingly slow approval processes.
- Markus Steilemann, VCI president, advocates for corporate tax reform, aiming to significantly lessen the tax burden and remove the solidarity surcharge.
- Despite the German chemical industry's resilience and the enduring relevance of its products, profits are primarily earned abroad, not within Germany and Europe.
- As a transnational force, the chemical industry could flourish if regional markets strengthen, due to potential global protectionism and planned tariffs.
