“We are stunned” – mechanical engineers settle accounts with the federal government

The mechanical engineering association VDMA accuses the federal government of being far too hesitant to implement reforms in Germany. VDMA President Bertram Kawlath said at the mechanical engineering summit in Berlin that almost exactly a year ago he said: "We are angry. Today I stand here and have to say: We are stunned."

The mechanical engineers cited above all the disputes in the government, which repeatedly block urgent reforms. “We are also stunned by the increasingly visible decline of our location.”

The result is that there are no investments, the bureaucracy continues to grow and social costs rise, said Kawlath. Many companies asked themselves why they should still invest in Germany. Every postponed investment and every “failed” reform weakened the location a little further.

The federal government must deliver. Courageous reforms in the labor market and in corporate taxes are finally necessary. Referring to an IW study commissioned by the association, he said that with one hour of extra work per week, economic output could be 1.5 percent higher in just five years.

The federal government expects economic growth of 1.3 percent

The black-red coalition is facing groundbreaking weeks. This involves, among other things, pension reform, reducing bureaucracy and making the labor market more flexible.

After years of economic weakness, the federal government expects higher growth of 1.3 percent this year. However, this is largely driven by the state spending billions on the loan-financed “special fund” to modernize the infrastructure and for defense.

At the same time, the wave of bankruptcies in Germany continues: the number of corporate bankruptcies rose significantly again in June, as reported by the Federal Statistical Office. By the middle of the year, 12,812 cases had been registered, the highest figure for the first half of the year since 2013. This is an increase of 6.7 percent compared to the same period last year.

The German Chamber of Commerce and Industry (DIHK) sees this development as a warning signal to the coalition. It must not deviate from its reform course now, says DIHK medium-sized business expert Marc Evers. “In order to get away from the insolvency records, we need rapid implementation of the agreed reforms and an overall economic policy that puts the competitiveness of companies back in focus.”