Enterprises demonstrate increased certainty in streamlining red tape, as per the survey results, with 97% of respondents expressing confidence.
German businesses are bracing for economically challenging times, but a survey suggests that slashing bureaucracy and deregulation could boost their confidence, Reuters reports. The Cologne Institute of Economic Research (IW) polled over 2,000 companies, finding that 97% of them anticipate a positive impact from reducing red tape.
Key insights:
- 75% of businesses consider the reduction of bureaucracy to have a "strong influence" on their confidence. Another 22% view it as a "moderate" booster.
- A sensible development in labor costs and the general course of economic policy also matter to companies, with two-thirds seeing a strong positive effect on their outlook if labor costs moderate.
- Improved export prospects to Asia and the US are a significant confidence factor for almost half of the companies.
- State action in areas such as competitively-priced energy, an innovation-focused tax policy, and a binding transformation policy also gains favorable reviews.
Michael Grömling, IW's chief economist, highlights the importance of business confidence, stating that "without it, necessary investments for future prosperity will not be made." He advocates for reducing bureaucracy, deregulation, tax relief, strengthening social security systems, and adopting a growth-oriented economic policy to foster confidence among companies.
However, businesses face threats like economic uncertainty, trade tensions, geopolitical instability, and volatile markets. Consumer confidence, shaped by factors like economic instability and high energy prices, can contribute to uncertainty as well. The regulatory environment also poses challenges as it's affected by Europe and the global economy.
In conclusion, deregulation could help German businesses navigate uncertain economic times by streamlining processes, saving costs, and fostering competitiveness. Nevertheless, external economic factors and consumer sentiment must also be addressed to positively impact overall business confidence.
Deregulation, specifically in the finance and business sectors, could significantly enhance German businesses' confidence, as indicated by 75% of companies viewing this reduction as having a "strong influence" on their outlook. Michael Grömling, IW's chief economist, emphasizes the importance of business confidence in fostering necessary investments for future prosperity. To further bolster business confidence, he recommends reducing bureaucracy, adopting tax relief, and adopting a growth-oriented economic policy.
