Soaring energy prices pose an existential threat to German businesses

Nearly a quarter of medium-sized German companies fear they will not survive soaring energy prices, a survey by the Federation of German Industries, BDI, revealed on Monday.

Industries across Europe have been suffering from soaring energy prices since autumn 2021, when the natural gas crisis sent benchmark European gas prices and electricity prices in the major economies as well.

Many energy-intensive industries, such as fertilizer producers and steel mills, have had to curtail production as record high gas and electricity prices squeeze their margins.

The energy crisis is hitting not only consumers but also industries, including in Europe’s largest economy, Germany.

According to a survey by the Federation of German Industries of 418 companies questioned between February 1 and 14, a total of 23% of them said that the spike in energy costs in recent months posed an existential challenge to them. Another 65% of midsize companies surveyed say that additional costs from rising energy prices represent a significant headwind for their operations.

About 87% want a quicker response from the federal government to reduce charges related to high electricity prices.

Of more than 400 companies surveyed, 34% have reduced their investments in climate neutrality due to soaring energy costs, according to the BDI survey.

The federation fears that high energy costs will crush the German economy, and some companies may consider moving production overseas, BDI President Siegfried Russwurm said in a statement. The federation warns that soaring energy costs will increasingly weigh on production, Russwurm added.

Germany’s medium-sized industrial companies are the backbone of its economy, as these companies account for the largest share of the country’s economic output, employ around 60% of all workers, and contribute significantly to corporate tax revenue. in Germany, according to BDI. .

By Tsventana Paraksova for Oilprice.com

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