This site uses cookies. Before continuing read and agree our policy on cookies. OK, I accept Cookies policy

Germany's high pensions become a problem

Lack of company investment in Germany is causing an economic setback for the country. According to a study conducted by Das Progressive Zentrum and Policy Networ, Germany’s GDP is not as high as other European countries. The lack of company investment is the main reason why Germany’s GDP is not as high as other European countries, according to a study publishing by S&P Global Ratings. Companies are unwilling to invest because of the country’s high pension provisions, which are a result of the countries low interest rates and high corporate tax sales. Companies prefer to invest in European countries with lower interest rates and corporate tax sales.

External Demands for Germany's good have decreased

Before the financial crisis some of Germany’s economy came from outside external demand for exports. However, since the financial crisis the global economy has slowdown, which means fewer external demands which has resulted in a lower GDP scores.  If the country would have had the same amount of investment as they did before the financial crisis, Germany’s GDP could have been 4.2% or higher.If the consumption for German products continues to decrease it could possible affect the German workforce as well. "We believe weak German business investment is the main factor weighing on the country's potential output," said S&P Global Ratings Economist Sarah Limbach in the report “ Low Business Investment is Weighing on German Economic Growth.”
Terms of use