Germany on the brink: German forecast for weaker economy in 2020 as exports slump

Angela Merkel, who is due to step down as Chancellor in 2021, will be faced with the prospect of weak forecasts as she heads into the New Year. A recent survey by Reuters showed representatives of major businesses expect next year to be another weak year for the economy. Dieter Kempf, president of BDI (Federation of German Industries) has emerged as one of the most outspoken critics of the government and has urged politicians to wake up to the economic realities at and and quit their “slumbering”. In comments carried by cash.ch, Mr Kempf said: “We have become a slumbering country because we were really well-off for ten years.

“This government has to make an effort for more investments.”

Touching on the industries sector’s downturn, Mr Kempf admitted: “No bottoming is in sight yet. Exports are also stagnating.” 

His frustration with the country’s grand coalition between the Christian Democrats (CDU) and the Social Democrats (SDU) is shared by many industry leaders. 

Criticism of Ms Merkel and her government is no longer only expressed in background talks but talked about in the open. 

German entrepreneur and president of DIHK (Berlin Chamber of Commerce and Industry) Eric Schweitzer points out that the last corporate tax reform was more than ten years ago. 

He said: “An important signal would be an internationally competitive corporate tax rate of 25 percent.

“Abolishing the solidarity surcharge for all companies is more than overdue.” 

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After years of booming, Germany’s economy is likely to have grown by only 0.5 percent in 2019. 

Politicians in Berlin will hope the end of Brexit uncertainty in the coming weeks will help the economy get back on track.

But uncertainty will still remain for many parties after Boris Johnson has taken the UK out of the EU on January 31. 

The Prime Minister has vowed not to extend the Brexit transition period, meaning a free trade deal will have to be secured in just 11 months. 

This is no easy feat and puts a no-deal Brexit back on the table. 

Last Friday MPs backed the withdrawal agreement, 358 votes to 234. 

On Monday Erfurt’s Chamber of Commerce and Industry (IHK) predicted the city’s export economy would continue into troubled waters in the New Year. 

It said Erfurt’s export volume in 2019 would be around 15 billion euros lower than in the previous year.

In the Chamber’s view, the positive growth rates of previous years are a thing of the past. 

The main sales market for products made in the central state of Thuringia is in other EU countries. 

Additional reporting by Monika Pallenberg.

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