Speech by Christian Sewing at the Handelsblatt Banking Conference 2023 - Unedited Version
In a recent speech at the Handelsblatt Banking Summit, a prominent figure highlighted the need to address several structural weaknesses in Germany's economy that are hindering growth and potential.
One of the key issues identified is the burden of high energy costs, which are weighing heavily on businesses and increasing operational expenses. This problem, if left unaddressed, could stifle competitiveness and hinder economic growth.
Another challenge is the excessive regulation and slow approval processes, particularly in infrastructure investment. These factors create bottlenecks and inefficiencies, deterring both domestic and foreign investors. The speaker emphasized the need for reforms to streamline these processes and foster a more business-friendly environment.
Tax burdens are another concern, as they increase costs for companies and discourage expansion and investment. The speaker called for a reevaluation of the tax system to make it more conducive to growth.
The impact of U.S. tariffs on exports, particularly on the German Mittelstand (small and medium-sized enterprises), was also raised as a concern. These tariffs have the potential to significantly impact the competitiveness of German businesses.
The strong euro exchange rate is another factor undermining export competitiveness. A weaker euro could potentially boost Germany's export-oriented economy.
Structural transitions in industry have not been fully overcome, preventing a shift from stagnation to growth. Declines in key sectors like construction, with output falling significantly and expected to continue declining, are a cause for concern.
The job market is also challenging, with rising unemployment and major companies announcing large-scale layoffs. This situation calls for measures to stimulate job creation and support businesses.
The speaker also highlighted the need for a European agenda, including a common energy and education policy, and investments in defense following a European strategy. A consensus on necessary reforms is needed, and it has been needed for years.
In addition, the speaker emphasized the importance of the financial center in Frankfurt and in Europe as a whole. Banks need to keep working hard, become even more profitable, invest in people and technology, and optimize the customer experience. The goal is to create a more efficient and globally competitive financial system.
Outdated rail networks are another significant issue that needs attention. Improving infrastructure is crucial for facilitating trade and boosting economic growth.
Lastly, banks need to prove that they create added value for their clients to increase willingness for regulation. This can be achieved by focusing on innovation, customer service, and efficiency.
These factors, combined with external shocks like U.S. tariffs and weak global demand, have produced a fragile economic environment marked by record corporate insolvencies and overall economic contraction. However, the speaker argues that Germany is not the "sick man of Europe." With the right reforms and policies, Germany can overcome these challenges and continue to be a leading economic power in Europe.
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