FRANKFURT (dpa-AFX) - According to ZEW President Achim Wambach, consumers and companies in Germany will have to adjust to comparatively high energy prices in the future. "Energy will probably never be really cheap again. We have less wind and less sun than many other countries," said Wambach in an interview with the news agencies dpa and dpa-AFX. The consequences would be felt above all by the energy-intensive sectors of the German economy.

"The labor market is starting to react," said the economist. Chemical giant BASF, for example, intends to tighten its austerity measures and cut further jobs at its main plant in Ludwigshafen. "The major political task will be to achieve the necessary transformation towards climate neutrality without significantly shifting jobs abroad and increasing unemployment," said Wambach.

According to the President of the economic research institute, the highest corporate taxes in the world, the cost of bureaucracy, insufficient digitalization and the resulting reluctance of companies to invest are currently a burden on Germany as a business location. Disputes within the traffic light coalition are causing uncertainty among companies, which are holding back on investments. "High uncertainty is a problem. A common will of the government is important and there is currently uncertainty," said Wambach. The cuts to the Growth Opportunities Act and its blockade in the Bundesrat were also not a good signal.

Inflation on the right track

The CDU and CSU only want to agree to the package with tax relief and a reduction in bureaucracy if the traffic light coalition withdraws the reduction in tax relief on agricultural diesel for farmers that has already been decided. In the mediation process between the Bundestag and Bundesrat, the volume of tax relief had already been reduced from the planned seven billion euros per year to 3.2 billion euros because the package would lead to a loss of revenue for the federal states.

"We must strengthen investments and need consistent structural reforms," warned Wambach. "In addition, the European single market must be further expanded." In contrast, the economist sees inflation on a "good path". Together with higher wages, this should strengthen private consumption, which is an important pillar of the German economy.

Inflation has been trending downwards for some time. In January, consumer prices were 2.9 percent higher than in the same month last year. Following the Russian attack on Ukraine in February 2022, energy and food in particular became much more expensive. The inflation rate in Germany climbed to 8.8 percent in autumn 2022./mar/jsl/jkr/DP/zb