According to a study by the ZEW Mannheim, Germany continues to lose competitiveness compared to 20 other leading economic nations. In the new edition of the “Country Index for Family Businesses”, the Federal Republic ranks 18th among the 21 countries, four places worse than in 2020.
The front runners are the USA, followed only by Hungary, Spain and Italy. The client was the Foundation for Family Businesses in Munich, which published the ninth edition of the analysis, which has been published every two years since 2006, on Monday.
The economist Friedrich Heinemann and his team assess 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 Federal Republic does not look good in a comparison of the German-speaking countries either: Switzerland is in fourth place, Austria is in 13th place.
Energy price shock cannot be offset
Heinemann writes of a “sobering picture”. 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.
“In a comparison of all 21 locations considered, Germany only offers first-class location conditions for the area of financing,” the paper says. “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 table.
Germany never in the top group
Since the first country index in 2006, Germany has never been in the top group, but initially it was at least in the middle. Heinemann and his team see a need for reform in Germany, especially in the areas of taxation and bureaucracy. However, they also certify that there is a great need for improvement in the education system and point to weaknesses in the key subjects German and mathematics.
“Germany as an industrial location has lost dramatically in terms of quality,” criticized Rainer Kirchdörfer, head of the Foundation for Family Businesses. “In an international comparison in the bottom places, that’s not the field in which we belong.”
