According to estimates by the Federation of German Industries (BDI), the German economy will grow by around one and a half percent in the new year. BDI President Dieter Kempf said, "In view of the global political uncertainty which poses a particular danger to our economy, future growth cannot be taken for granted."
Kempf believes that the overall global situation is more unclear than in previous years and that uncertainties and sources of conflict are drawing ever closer to the European Union. The BDI President warned that "The things we take for granted can be jeopardised very quickly. Germany will have to work harder to maintain its current level of prosperity. Policies should back business more strongly."
The BDI currently estimates that German exports will rise by two to three percent this year. The number of employees, which currently stands at 43.5 million, will increase by up to 500,000 according to Kempf, who has been head of the BDI since the beginning of the year.
He added that the record surpluses of the federal government, the states and the local authorities must be used to protect against less favourable times - and to increase investment. This is possible without increasing taxes or compromising the recovery of public-sector budgets. "The key is upfront public investment in our transport, energy and digital networks as well as in education," the BDI President emphasised. "Only then will more participation in growth be feasible."
The introduction of tax incentives for research, which has proved successful in many industrialised countries, would offset existing competitive disadvantages. With regard to the energy transition, cost-efficiency is a foreign concept and the further development of the electricity grid is slow. "This has to change. Our companies want a successful energy transition - and one that can bring export success." The subject of controlled immigration is also on the agenda.
German business will listen carefully when Donald Trump outlines the plans for his presidency in the USA. With regard to Germany's most important trading partner, the BDI president warned of a trend shift away from free trade towards isolationism: "This would harm the entire global economy and especially the export-oriented German economy." One in four jobs in Germany depends on exports - and as much as one in two in industry.
"'Make America great again' will definitely not work if the USA isolates itself," Kempf emphasised. Companies in the USA rely on German engineering technology and intermediate products from Europe. "The European Commission must keep its channels of communication regarding a transatlantic free trade agreement open." German industry still backs TTIP, the BDI President confirmed.
German industrial companies in China are increasingly worried about government interference, Kempf said. Europeans must be able to acquire majority shareholdings in companies in China just as the Chinese can do in Germany: "The focus now is on dismantling walls in China, and not about building walls in Germany."
Kempf called for the bitter reality after the Brexit referendum to be confronted. The uncertainty surrounding the process is poison for the economy. Regarding policy in Brussels and Berlin, there should be a common approach during the negotiations, namely to stick together and make Europe stronger. "In my opinion, Europe is not the problem, but the solution." Only by working together can the continent continue to be successful in the world, the BDI President explained.