2024-01-17 16:11:15
Clemens Fuest in Graz: No farewell to growth. Value creation not in industry.
Graz/Vienna (OTS) – In a difficult economic and political environment, the traditional New Year’s reception of the German Chamber of Commerce in Austria (DHK) took place in Graz. Once once more, the cultivated atmosphere of the auditorium of the Old University provided the framework for the event.
Christian Jauk, head of the Styrian regional directorate of the DHK, and honorary consul Joachim Schönbeck, chairman of the board of Andritz AG, were able to welcome a particularly large number of prominent representatives of Styrian politics and business, including the industrialist and former minister Martin Bartenstein and the former CEO of Andritz AG, Wolfgang Leitner. State Councilor Werner Amon represented the State Governor, City Councilor Günter Riegler represented the city of Graz. The keynote speaker was the prominent economist Clemens Fuest, President of the Munich Ifo Institute on the topic “Economic Development in 2024 in Germany, Austria and Europe”.
The German ambassador to Austria Vito Cecere outlined the government’s positions in Berlin on the major international problems: Germany will continue to support Ukraine because it is also fighting “for freedom with us”. Israel’s right to exist is “non-negotiable” for Germany. He also mentioned that many Styrian companies are exemplary for climate-friendly production.
Austria at the top of “hidden champions”
Where does new value creation arise? Where will deindustrialization lead and will we have to say goodbye to growth? Where will German energy policy lead? These were some of the questions that Clemens Fuest, President of the Ifo Institute in Munich and one of the most prominent German economic researchers, asked himself in his keynote speech at the DHK New Year’s reception in Graz – and to which he gave some surprising answers.
Fuest contradicted the general view that a large industrial sector was the only prerequisite for economic success. There are also other ways, depending on how a country can use its comparative advantages. In Germany and Austria, industry contributed significantly to prosperity; But if that declines, the question arises as to where and how new added value is created and that doesn’t just have to be in industry. In any case, it is wrong to try to do this with state planning. A country should not make the mistake of specializing where it is weak, but must strengthen itself where it has competitive advantages. “And that is the job of entrepreneurs.” In any case, health will be a growth sector, said Fuest. But this should not become a burden, but should “strengthen market forces”.
Fuest was able to show the high potential for innovation in Germany and Austria using the example of the “hidden champions”. Together with Switzerland, our two countries are far ahead of all other European countries. These champions have high value creation potential and are often medium-sized companies with over 500 employees and are often family businesses. Styria also has some of them. When it comes to start-ups (“unicorns” with a value of over one billion euros), however, Germany is relatively weak; Austria has two of them.
The biggest brakes on growth are demographics and labor shortages, diagnosed Fuest. Added to this is bureaucracy and high tax burdens and, in Germany, high energy prices.
Fuest particularly described the phenomenon that although more and more workers are in employment, more hours are not being worked because the proportion of part-time employment has risen sharply, especially among women. “And there are also institutions that prevent people from working.”
The Ifo President criticized the subsidized industrial electricity price in Germany, which can also be a warning for Austria. In principle, input prices have to cover costs; a subsidy does not increase supply. He called the argument that the ‘bridge electricity price’ only applies until there is enough renewable energy a “bridge to nowhere”. Electricity prices would remain high because Germany has significantly higher production costs for renewable energies compared to other international locations. Even if energy prices were to fall once more in the medium term, there would be no market failure in adapting to this period, and subsidies would therefore be unfounded. “Subsidy programs carry the risk of creating false incentives and expensive delays in structural change.”
The evening was moderated by ORF Steiermark editor-in-chief Wolfgang Schaller. In a panel discussion following the keynote, Jauk emphasized the importance of the capital market for growth and innovation. The Austrians are masters of austerity, but are not sufficiently successful in bringing these funds into the economy. The actual defining motif of the stimulating evening was the call from Andritz AG CEO Joachim Schönbeck: “Let’s turn the crisis into an opportunity.” And humorously at the end: “My mood is significantly better than Fuest’s.”
Questions & Contact:
Questions:
German Chamber of Commerce in Austria
Berenika.sterba@dhk.at
T.: +43 1 545 14 17-28
1705507886
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