Agency Report –
German Economy Minister Katherina Reiche on Tuesday warned of a continued decline in Europe’s biggest economy, saying she believes that the country’s “structures are currently not competitive.”
Addressing a trade conference in Berlin, the minister said German companies were suffering from excessive regulation, high energy prices and a welfare state that, on its current scale, led to overblown labour costs.
The minister, who has repeatedly called for domestic reforms, also pressed for EU-level changes.
“The EU must refocus its efforts on becoming a driving force for strong competition and no longer see itself as a regulatory stumbling block,” Reiche said.
The minister called on businesses to diversify their supply chains, saying she didn’t understand why this hasn’t already happened.
She warned against unilateral dependencies, especially when it comes to raw materials from China, pointing to the growth potential of markets such as Vietnam and Mexico.
Another challenge facing the German economy, which is reeling from two consecutive years of recession, is being caught in the trade dispute between China and the US, according to Reiche.
Germany’s ability to navigate the tensions “will determine whether we can remain a true economic power,” she said.
German-Chinese relations have recently been strained due to China’s decision to tighten export controls on rare earths, a move that sparked great concern among German companies.
Businesses are dependent on the metals for the manufacturing of engines, turbines and sensors, for example.
Meanwhile, new US tariffs on EU imports are weighing on Germany’s export-driven economy.
