Companies in Germany are increasingly pessimistic about the coming financial year. Almost one-third of companies anticipate a decline in new orders in 2020, as shown by the business survey conducted by the German Institute for Economic Research (IW) in Cologne. Only a quarter expect an increase in production. A total of 2300 companies were interviewed.
The development will not pass without a trace in the labor market, predicted the IW researchers. According to the survey, next year only 21.5 percent of companies want to hire additional employees. Nearly 29 percent, however, plan a job cuts.
It is true that the survey does not predict whether the bottom line will lead to more jobs being cut or created. However, according to IW assessment, the increase in employment in Germany since 2005, which has created a total of around 5.5 million jobs, should end in 2020.
Location Germany loses competitiveness
According to IW, the German economy suffers heavily from the weakening global economy, whose growth is slowing down due to protectionism and geopolitical uncertainties. For the first time since the global financial market crisis a decade ago, the majority of companies expected a decline in exports. In particular, the manufacturers of intermediate goods - such as the chemical industry or the mechanical engineers - would have to deal with weak global demand.
Investments also suggest that companies are reluctant to hold their ground next year. But not only the world economy, but also rising labor and energy costs in the Federal Republic are to blame. The competitiveness of Germany as a location has also suffered in recent years due to labor market regulations and bureaucratic approval procedures in many areas.
