Rising energy prices push German firms to cut new investments

BERLIN — Around 40% of German companies are already feeling the impact of rising energy prices and almost half want to reduce investments due to rising energy costs, a survey showed on Monday.

Gas and electricity bills for German householders entering into new contracts hit a record high last month and soaring natural gas and oil prices following Russia’s invasion of Ukraine helped push Germany’s annual inflation to a 40-year high in March.

Around 46% of companies said they want to reduce investments due to rising energy prices and a quarter of German companies expect to see a burden from price shock in the second half of the year, a survey by the Ifo Institute published by Augsburger Allgemeine newspaper showed.

The survey, which questioned 1,100 companies, most of them family businesses, showed that every tenth firm was considering giving up energy-intensive businesses entirely, while 14% were mulling job cuts due to rising energy costs.

Almost 90% of companies said they would probably have to raise prices to counter soaring costs, while three quarters plan to expand their investments in energy efficiency, it added.

“We need a policy that corrects this distortion of competition and stops energy prices from soaring,” said Rainer Kirchdoerfer, board member of The Foundation for Family Companies which commissioned the survey.

Germany’s ruling coalition unveiled relief measures last month worth roughly €16 billion ($17.3 billion) to help consumers cope with soaring energy costs and to reduce dependence on Russian gas after the invasion of Ukraine.