German firms optimistic for 2018, worker shortage main brake

German firms optimistic for 2018, worker shortage main brake
FILE PHOTO - Workers are silhouetted on amongst scaffold at Potsdamer Platz square in Berlin, Germany, October 27, 2017. REUTERS/Fabrizio Bensch
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BERLIN (Reuters) – More than half of Germany’s industry associations have shrugged off worries about U.S. protectionist policies and Brexit, and are more positive about their situation than they were a year ago, a survey showed on Wednesday.

The main factor holding firms back in Europe’s biggest economy is a shortage of skilled labour, the IW economic institute in Cologne said.

Its poll showed that 26 of 48 industry associations were more upbeat than they were at the end of 2016 and more than two- thirds expected firms in their sector to produce more next year than this.

“Despite the protectionist policies of U.S. President Donald Trump and prospect of Brexit, investment in Germany rose this year and will strengthen further in 2018,” said IW in a statement.

Only two sectors were pessimistic – the food industry, which is worried about tougher competition and higher costs, and sections of the cooperative banking sector which are suffering from low interest rates and margins.

The IW said 24 of the 47 industry associations which gave investment estimates, expect higher spending levels from their member companies.

The main factor holding back firms is a shortage of skilled labour, a long-standing concern in Germany.

“The production prospects in the German economy could be better if more skilled workers were available,” said IW Director Michael Huether.

Most economists expect the German economy to grow for the ninth consecutive year in 2018. Earlier this month, the Ifo institute forecast 2.6 percent growth for next year, following an expected expansion of 2.3 percent for this year.

A separate survey of 820 mostly family-owned businesses, showed that 69 percent expected improvements in their operating business next year, up from 59 percent a year ago.

(Reporting by Rene Wagner; Writing by Madeline Chambers; Editing by Andrew Bolton)

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