BERLIN, May 28 (Xinhua) -- Germany's industrial base is shrinking due to rising business closures, particularly in research-intensive industries, according to a study published Tuesday by the Creditreform agency and the Leibniz Center for European Economic Research (ZEW).
In 2023, around 176,000 companies in Europe's largest economy closed, marking a 2.3 percent increase from the previous year. The study noted that most closures occurred "quietly and calmly" with only 11 percent resulting from insolvency.
While the trend in retail and consumer-related services declined slightly, closures in construction and manufacturing rose by 2.4 percent and 8.7 percent respectively. In research-intensive industries such as pharmaceuticals and mechanical engineering, the increase was as high as 12.3 percent.
"Abandoned stores and empty shop windows affect people both economically and emotionally. But the closures in the industry hit the core of our economy," said Patrik-Ludwig Hantzsch, head of economic research at Creditreform.
The impact on research-intensive industries was particularly severe due to stagnating start-ups. "If the stock does not grow, the number of closures increases disproportionately," said Sandra Gottschalk, senior researcher at ZEW.
Facing high energy and labor costs, Germany is eager to attract foreign investment. However, the German Economic Institute (IW) reports that net investment outflows have steadily increased over the last three years.
Major German industrial companies such as Bosch and Continental have announced significant job cuts in recent months. U.S. carmaker Tesla, which planned to expand its production near Berlin, also intends to cut 400 jobs at its only European Gigafactory.
"Turbulence at prominent and large companies is currently dominating the discussion about possible de-industrialization," said Creditreform expert Hantzsch. "However, the quiet death of many smaller companies and highly specialized businesses is just as serious," he warned. ■
