Panic is spreading in parts of the German economy due to the rapid increase in gas and electricity prices.

The extremely high gas and electricity prices mean that medium-sized companies in particular fear for their existence. Is there a threat of deindustrialization? Associations are sounding the alarm, and the Ifo Institute is anticipating increased investments abroad.

Panic is spreading in parts of the German economy due to the rapid increase in gas and electricity prices. In view of the further round of price increases expected by the beginning of next year, both companies and their industry associations fear that production in Germany could become permanently unprofitable. The Munich Ifo Institute expects that the development of energy prices will lead to increased investments abroad.

“At first glance, the cost of energy is not that high,” says Ifo economist Oliver Falck. The share of energy costs in the gross production value is 0.5 percent in the automotive industry, 0.8 percent in mechanical engineering and 3.1 percent in chemicals.

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