Economic Standstill in Lower Saxony - Economy of Lower Saxony temporarily halted
Despite initial reform steps, Lower Saxony's economy continues to struggle, with three consecutive years of near stagnation. The Chamber of Industry and Commerce Lower Saxony (IHKN) has identified the economy's sluggish recovery as being tied to persistent structural challenges and external uncertainties.
According to IHKN CEO Maike Bielfeldt, more real structural reforms and less bureaucracy are needed to foster sustainable growth. The economy's sluggishness is influenced by several factors, including the negative impact of rising tariffs, particularly from US trade policy, which has reduced competitiveness for German products and weakened export performance.
The general slowing of global economic growth also dampens export demand and manufacturing output, while continued high uncertainty and lack of planning security discourage firms from investing and expanding. These factors collectively result in a difficult environment for Lower Saxony's economy.
In a survey of approximately 2,400 businesses, only about one in five companies described their business situation as good. Nearly a quarter of the surveyed businesses spoke of a poor business situation. In the wholesale trade, one in three businesses anticipate a decline in foreign business due to uncertainty about tariffs. Many sectors in Lower Saxony lack impetus, and the housing industry is facing difficulties due to high interest rates.
To overcome these issues and foster sustainable growth, the IHKN advocates for targeted structural reforms. These reforms include enhancing long-term growth potential by creating a more reliable economic and regulatory environment, modernizing infrastructure, particularly in energy and transport, and improving business conditions so that companies can adapt to new workplace concepts and market demands more efficiently.
Bielfeldt, the CEO of Lower Saxony Chamber of Industry and Commerce, emphasized the need for a priority on infrastructure investments. The federal government's initial reforms, such as the industrial electricity price, have been criticized for not being sufficient for trade and services.
Despite some positive signals from banks and temporary employment agencies, Bielfeldt did not indicate a trend reversal. Many companies in Lower Saxony are hesitant to invest due to unclear and unreliable framework conditions. The IHKN does not foresee a real revival, and only 13% of businesses surveyed hope for an improvement in the coming months.
Orders from the special fund for infrastructure in Lower Saxony's housing industry are scarce, and the situation in several sectors of Lower Saxony remains difficult. The housing industry in Lower Saxony is facing difficulties due to high interest rates.
In a positive note, there are cautious upticks in the office real estate market in Hannover, reflecting shifting demand toward better-quality, more efficient spaces. However, investment hesitancy remains high owing to economic and geopolitical uncertainties.
In conclusion, Lower Saxony's economic stagnation reflects deeper systemic challenges linked to external trade pressures, global uncertainties, and insufficiently resolved structural issues. The IHKN emphasizes that only with comprehensive and well-targeted structural reforms—focusing on investment confidence, infrastructure modernization, and adaptation to new business realities—can the region’s economy effectively recover and grow.
- The IHKN CEO, Maike Bielfeldt, suggests that more structural reforms, particularly in the areas of infrastructure and employment policy, are needed to improve the business environment and promote sustainable economic growth in Lower Saxony.
- One of the challenges identified by the IHKN is the impact of rising tariffs, especially from US trade policy, on the competitiveness of German products and export performance, which could be mitigated through appropriate employment and finance policies.
