Germany must forge new policy to save its industry, says Chancellor Scholz

German Chancellor Olaf Scholz said on Wednesday he would invite the country's top business associations and trade unions to a meeting in October on forging a new policy to save industry in Europe's largest economy.

High energy costs, weak global demand, a disruptive shift towards net-zero economies, and growing competition from China are raising existential questions for Germany's export-oriented, industrial economic model, with CEOs clamoring for more government support.
 

Fears of de-industrialization came into focus last month when carmaker Volkswagen announced it was considering for the first time in its history closing factories in Germany.
 

"We have to fight especially for industry here in Germany," Scholz said in a speech to parliament. "Germany is an industrial country."
 

 

One key question, he said, was how to ensure cheap energy.
 

Germany agreed last year to cut the electricity tax to the minimum level permitted by European Union law for all manufacturing firms, as well as raising and extending for five years the compensation received by 350 firms that compete internationally and are most at risk of relocating.
 

However not enough companies benefited from such measures to date, Scholz said.
 

Separately, the EU needed to start concluding free trade deals, he said, ensuring that they were not at the mercy of the whims of an individual country, in what appeared to be a reference to France's blocking of a deal with South America's Mercosur bloc.
 

"We did not hand over the competence for trade policy to Europe only for no more trade agreements to be agreed," he said.
 

Scholz also criticized the EU's decision to impose tariffs on Chinese-made electric cars, saying 17 other states were sceptical as well as all the executives of carmakers with whom he had spoken.
 

"My request is that we come to an agreement between China and the European Union," he said.
 

Scholz noted that Germany also needed to discuss how to foster other sectors, beyond the industrial one.
 

"Apple, Microsoft, Amazon, Meta, OpenAI, none of these are European or German companies," he said.