German industry see FDP revival boosting digital transition
25/09/2017 15:16
By Georgina Prodhan
FRANKFURT, Sept 25 (Reuters) - German industry leaders want
a shift towards digital services to be a priority as the
pro-business Free Democrats (FDP) appear set to enter coalition
talks with Angela Merkel's conservatives and the Greens.
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The FDP, which returned from the German political wilderness
with 10.7 percent of the vote in Sunday's election, promise to
cut taxes and raise investment in infrastructure, partly funded
by privatisations. urn:newsml:reuters.com:*:nL5N1H856A
Investing in high-speed telecoms networks and automation
would boost economic activity and global competitiveness and has
long been a key demand of Germany's export-led manufacturers --
although some workers fear it risks job losses. urn:newsml:reuters.com:*:nL8N1HT4GO
"Investments in education and digital infrastructure are
urgently needed," Werner Baumann, chief executive of drugmaker
Bayer BAYGn.DE , said in an emailed statement.
Joe Kaeser, chief executive of industrial group Siemens
SIEGn.DE agreed, but warned of marginalising workers and
pushing them into the arms of the far-right Alternative for
Germany (AfD), the first far-right party to enter the German
parliament in more than half a century.
"We are an industrial nation and must shape the fourth
industrial revolution and design it in a socially inclusive way
- so that as many people profit from its as possible," he said.
Economists see such investments as a way to combat the
effects of an ageing population and to boost stalling
productivity gains, factors that are casting a shadow over
growth prospects in the medium term in Europe's largest economy.
"Domestically, a focus on digitalisation is one opportunity
to counteract these structural headwinds, and re-accelerate
productivity growth," Morgan Stanley economist Elga Bartsch
wrote in a note.
German business confidence deteriorated unexpectedly in the
weeks before Sunday's federal election, suggesting that a
consumption-led upswing could lose momentum in coming months.
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Thilo Brodtmann, executive director of powerful engineering
lobby VDMA, said on Monday: "We need a clear signal for a
digital breakthrough, for education and research,
innovation-friendly tax policies and above all a priority for
flexibility and good ideas."
The VDMA represents large manufacturers such as engineering
group Siemens, robot maker Kuka KU2G.DE or machine-tool maker
DMG Mori GILG.DE as well as a host of smaller firms banking on
digitisation to boost productivity.
And a host of communications firms including Vodafone
VOD.L , Liberty Global LBTYA.O and United Internet UTDI.DE
stand ready to take advantage of funds that may be made
available to expand rural broadband, for example through the
further privatisation of incumbent Deutsche Telekom DTEGn.DE .
But UBS economist Felix Huefner said he doubted that any
radical stimulus measures would be taken soon, given that the
German economy is expected to grow at its strongest pace in six
years this year.
"Even if digitalization may be a key priority for Merkel, we
don't expect deep reforms... given the lack of pressure in a
very benign economic environment," he wrote in a note.
(Additional reporting by Patricia Weiss and Alexander Huebner;
Editing by Keith Weir)
((georgina.prodhan@thomsonreuters.com; +49 69 7565 1279;
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Keywords: GERMANY ELECTION/DIGITAL