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Railway construction site in Leverkusen: Germany has a great need for reform
Photo: Henning Kaiser / dpa
Germany has slipped to one of the last places in the ranking of attractive business locations.
In the new edition of the »Country Index for Family Businesses«, the Federal Republic occupies 18th place among the 21 industrialized countries.
This means that Germany is four places worse than in 2020. The USA is at the top, followed by Canada and Sweden.
Behind Germany are only Hungary, Spain and Italy.
In addition to too much bureaucracy, high taxes and a slow willingness to innovate, high energy costs and a shortage of workers are now also worsening the quality of the location in Germany, according to the study by the Mannheim-based economic research institute ZEW.
The client was the Foundation for Family Businesses in Munich.
"Germany as an industrial location has lost a lot of its quality," criticized Rainer Kirchdörfer, head of the Foundation for Family Businesses.
"In an international comparison, in the last places, that's not the field in which we belong."
The Federal Republic of Germany also does not look good in a comparison with the direct neighboring countries: Switzerland is in fourth place, Austria is in 13th place. Poland is in tenth place and is the strongest climber.
France is just ahead of Germany in 17th place.
No sign of progress
The authors of the study, led by the economist Friedrich Heinemann, evaluated six location factors for family businesses in each country: tax burden, labor costs and productivity, effort and costs of state regulation, the financing conditions for companies, the quality of the infrastructure and public administration, as well as energy supply and costs.
The authors write that the countries in places 14 to 19 are very close to each other with their point values.
But there are no signs of an upward movement for Germany.
Heinemann writes of a "sobering picture".
The findings on Germany's position offer "considerable cause for concern".
According to the study, the energy price shock since the start of the Ukraine war has put the competitiveness of several European countries at a disadvantage.
However, according to the economists, Germany cannot compensate for this with advantages in other respects.
From midfield to bottom
"In a comparison of all 21 locations considered, Germany only still offers first-class location conditions for the area of financing," says the paper.
»On the other hand, Germany cannot keep up with the top locations in North America, Western Europe or Scandinavia in any of the other subject areas considered.« In the areas of tax burden, energy, labor and regulation, the authors see Germany at the bottom of the list.
Since the first country index in 2006, Germany has never been in the top group, but initially it was at least in the middle.
The analysis is published every two years.
Germany has slipped six places since 2006.
Heinemann and his team see a need for reform in Germany, especially in the areas of taxation and bureaucracy.
Experts criticize that while other countries are investing in infrastructure or reforming their tax systems, Germany is making no progress.
»The only clear asset is the comparatively low debt of the state and private households: Germany, as a relatively solid country, can afford to react to crises.«
Take the »chance to turn around«
The authors also see a great need for improvement in the education system and point to weaknesses in the key subjects German and mathematics.
In view of the shortage of skilled workers, a real turnaround in education policy is necessary.
"The current crisis should be seen as an opportunity to turn things around, especially to reduce crippling regulatory burdens," write the authors of the study.
mmq/dpa/Reuters
