Ukraine war-induced high energy prices to burden 62% of German companies

Cologne, Germany – A large number of German companies expect to be hit by higher energy prices, as the stand-off between Russia and the West, and the war in Ukraine continues.

A survey of 200 companies, conducted by the German Economic Institute (IW) during the first week of the war, found that 62% of companies expect “rather large or very large burdens”, as a result of increased energy prices.

In the industrial segment, including chemicals and pharmaceutical sector, 70% of participants expected large impact from higher energy costs, said IW 9 March.

Almost every third company surveyed expects problems as a result of "missing gas supplies."

Many companies use gas as an energy source, but within the industry, for example in large chemical and pharmaceutical companies, it is also used as raw materials.

Accordingly, 37% of industrial companies expect charges due to the shortage of gas as feedstock.

In addition to gas supply disruptions, companies are also concerned about failure of  suppliers such as software providers in Ukraine, who had to stop work.

“This means that individual parts are now missing, as was the case in the automotive industry recently,” said IW.

For 31% of the companies surveyed, cancelled deliveries will become a burden – among industrial companies the figure is slightly higher at 39%.

"The war not only brings incredible suffering to the people in Ukraine, it also destroys part of the economic basis of life and the economic production potential," said IW economic expert Michael Groemling.

“The problems that Europe felt as a result of the corona pandemic are being exacerbated by Putin’s war of aggression,” he added.

The economic recovery, he concluded, “is now dragging on.”