Industrial closures hit the core of the European Union's economy

"Thousands of companies in Germany closed last year. The increase in industrial closures is particularly worrying.

 

According to a study, a particularly large number of industrial companies closed during the economic downturn last year. In the construction industry, the number rose by 2.4 percent to 20,000. In the manufacturing industry, 11,000 companies closed, according to a study published on Tuesday by the credit agency Creditreform in cooperation with the Leibniz Center for European Economic Research (ZEW). This is an increase of 8.7 percent and the highest level since 2004. The industrial base is dwindling, it was said.

 

"Abandoned shops and empty shop windows hit people in their area economically and emotionally," said Patrik-Ludwig Hantzsch, head of Creditreform economic research. "But the industrial closures hit the core of our economy."

 

High energy and investment costs after sanctions against Russia, interrupted supply chains, staff shortages and political uncertainty is a toxic cocktail for the economy.

 

Experts are concerned that it is primarily affecting research-intensive companies, such as those in the chemical and pharmaceutical industries or mechanical engineering. The effect is particularly strong there because the closures are not offset by stagnating start-ups, explained ZEW expert Sandra Gottschalk. "If the stock does not grow, the number of closures increases disproportionately." The shrinking of research-intensive industries is not a good prerequisite for the necessary innovations that are the basis for Germany's future competitiveness and growth, the study said.

 

According to the data, a total of around 176,000 companies closed in Germany last year, 2.3 percent more than the year before. 11 percent were the result of an application for insolvency. In retail, the number of closures fell slightly by 0.8 percent to around 37,000 companies. Among consumer-related service providers, which include the hospitality industry, real estate and housing, hospitals, doctor's offices, hairdressers and dry cleaners, a good 51,000 companies gave up, 0.5 percent less than a year earlier. Other sectors such as postal services and transport or mining were not analyzed in detail in the study." [1]

 

1. Schließungen in Industrie treffen Kern der Volkswirtschaft
Frankfurter Allgemeine Zeitung (online) Frankfurter Allgemeine Zeitung GmbH. May 28, 2024.