Bloomberg reports that Germany is on the verge of deindustrialization.

Power price increases may cause a factory departure from the country.



According to Bloomberg, a large-scale power outage could seriously jeopardize Germany's industrial sector, as the country's producers of car parts, chemicals, and steel face rising energy prices almost every day.


"Energy inflation is far more dramatic here than anywhere else," said Ralf Stoffels, CEO of BIW Isolierstoffe, a manufacturer of silicone parts for the automotive, aerospace, and appliance industries. "I am concerned about a gradual deindustrialization of the German economy," he added, according to the agency.


Gas and electricity prices in Germany are said to have more than doubled in the last two months.


Earlier this week, the European benchmark power price reached a new high of more than €500 ($509) per megawatt hour, representing a 500% increase over the previous year.


On Friday, European natural gas futures on the TTF exchange were trading at around €242 per megawatt-hour, which is ten times higher than in August 2021.


"Prices are putting a heavy burden on many energy-intensive companies competing globally," said Matthias Ruch, a spokesman for Evonik Industries, the world's second-largest chemical producer, as quoted by Bloomberg.


Russian gas shipments, Germany's largest energy supplier, has been steadily declining in recent months due to technical issues caused by Ukraine-related sanctions.


To deal with the crisis, the German government has urged citizens to reduce their energy consumption by turning down air conditioners and using less hot water. Berlin has also taken steps to restart coal power plants and imposed an additional tax on gas consumption.


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