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Every second German company had to call off investments

The current global crisis has particularly severe consequences for German companies.

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Every second German company had to call off investments

The current global crisis has particularly severe consequences for German companies. Half of them were recently unable to carry out planned investments, and 39 percent even had to withdraw completely from certain markets. Worldwide it was significantly less at 43 and 30 percent respectively.

This is shown by a worldwide survey of 760 CEOs of large companies, 100 of them in Germany. It was carried out by the consulting company EY, the results are exclusively available to WELT AM SONNTAG.

"In the past, German companies have benefited enormously from free international trade," says Constantin M. Gall, Partner at EY in the Western Europe region. At the same time, the economy in this country is particularly dependent on free trade routes, international regulations and secure supply chains.

"In view of the many trouble spots, Germany's business model is currently facing what is probably the greatest challenge since the Federal Republic came into existence."

The German economy is not only burdened by the energy crisis and inflation. Corona also continues to worry companies. 53 percent see new disruptions in global retail chains and economic processes due to the pandemic as the greatest risk, nine percent more than in an international comparison.

This is mainly due to the fact that German companies are particularly heavily involved in China, where the government is still pursuing a very strict zero-Covid strategy. Around 200 million people in the country are currently in lockdown.

At the same time, German companies fear China's increasing isolation. 37 percent describe the formation of economic blocs and interruptions in the trade in goods as one of the greatest risks for the growth of their own company - worldwide the share is 30 percent.

When it comes to the effects of the Russian invasion of Ukraine, however, the German CEOs hardly differ in their assessment from their colleagues in other countries. 23 percent see this as the biggest problem, worldwide it is 22 percent. In the USA, however, the value is only 16 percent.

However, German companies are somewhat less pessimistic than the others when it comes to the extent to which inflation affects the performance of their own company. Worldwide, 69 percent assume negative effects, in Germany it is 60 percent.

This can be an indication that the German companies have a particularly strong position in their respective markets and thus a high price-setting power. You can therefore pass on cost increases more easily.

However, German companies are also more affected by these than others. 83 percent of CEOs complain that labor costs have risen by more than 10 percent; worldwide the proportion is slightly lower at 77 percent.

EY expert Constantin Gall is therefore pessimistic. "For many months, we have seen how delivery difficulties put entire industries in a constant state of emergency and lead to significant cost burdens," he says. "Now there is also a looming recession and an energy crisis in Europe - and this is hitting Germany, which has become dependent on Russian gas, particularly hard."

Gall fears that extremely challenging months are ahead for German companies. "If the German economy does not find any solutions here, there is a risk of more than losing the title of world export champion," he emphasizes. "It's about jobs and not least the prosperity of our country."

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