Budget crisis shakes industry’s confidence in Germany

Duesseldorf, Nov 25 (BNA): Germany’s intensifying budget crisis is hitting Europe’s top economy where it hurts most: its reputation as a reliable partner for industry, some of which now fears that Berlin may not stand by its pledges to fund green and other projects.

As well as tearing a 60 billion euro ($65 billion) hole in the government’s 2024 spending plans, the constitutional court ruling raises wider questions about aid for big industrial projects that were supposed to be supported with public money, Reuters reported.

These include plans by ArcelorMittal , the world’s second-largest steelmaker, to spend 2.5 billion euros to decarbonise its German steel mills, efforts that depend on now-uncertain government support.

“We are disappointed and, above all, concerned, as we still lack funding decisions and thus a perspective for our industrial production in Germany,” said Reiner Blaschek, who heads ArcelorMittal’s German division.

He called the government’s inability to come up with a quick fix for the budget impasse “grossly negligent”, highlighting the potential consequences for Germany, which is already struggling to keep its place as a prime industrial location.

Chancellor Olaf Scholz in a video message on Friday said the government was reworking the 2024 budget swiftly and that all necessary decisions would be taken this year.

ArcelorMittal’s German rival SHS Stahl-Holding-Saar has also not received a formal commitment from Berlin to support a 3.5 billion euro investment push to drastically cut CO2 emissions at its furnaces.

Chief Executive Stefan Rauber said a solution had to be found within days, not weeks, and that he needed a decision by the end of the year to make the programme happen.

“What we’re seeing here is devastating for Germany as a business location globally. And the longer it goes the worse it will get,” he said.

Besides the 6 billion euros of steel investments, other sectors potentially affected by the court ruling include 4 billion euros in the area of microelectronics and 20 billion euros for battery cell production, according to an economy ministry paper seen by Reuters.

It also covers so-called climate protection agreements that are supposed to help industry protect itself against power price swings, the paper said. Those have previously been estimated at 68 billion euros.

Y.R