Two in three German companies have at least partially relocated their operations abroad as a result of Germany's ongoing energy chaos, a report by major consultancy firm Deloitte has found. (Photo by Sascha Schuermann/Getty Images)


Two in three German companies relocate abroad amid energy chaos


Two out of three German companies have at least partly relocated their operations abroad because of Germany’s ongoing energy chaos, says consultancy firm Deloitte.

Previous reports showed almost half of the country’s small-to-midsized companies were considering moving abroad or stopping trading entirely.

According to Deloitte, 67 per cent of Germany’s companies have moved at least some operations abroad.

Most business cite high energy prices and inflation as their reasons for moving.

Things are worse in Germany’s mechanical engineering, industrial goods, and automotive sectors.

In these industries, 69 per cent of companies have relocated their operations to a moderate or very large extent.

Most of these companies plan to move low-skilled component production overseas, while a smaller number also look to move high-skilled production processes abroad, too.

Deloitte’s findings come amid fears Germany is experiencing wide-scale deindustrialisation because of its ongoing energy crisis.

The country’s green energy agenda, combined with the Ukraine war, have caused its electricity prices to skyrocket.

Deloitte partner Florian Ploner expects more companies to leave Germany in the near future if electricity prices remain as high.

“Deindustrialisation is already taking place here on a significant scale,” he says.

If conditions remain the same, “more companies will most likely follow suit and increasingly important parts of the added value will move away,” he adds.

Germany’s prospects of reversing the trend appear slim.

Companies tell Deloitte increased subsidies and reduced bureaucracy would encourage them to stay, but have little faith the country’s current government will take actions needed to keep them from leaving.

While the report makes grim reading for Berlin, it has some silver linings for Brussels.

Companies mostly plan to relocate their manufacturing processes within the European Union, they say.

China is an increasingly less attractive location for businesses, with only ten per cent of companies looking to relocate some of their operations to Asia.

Meanwhile, eight per cent are exploring bringing some of their Asian operations back to Europe, amid growing tensions between East and West.