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"Now active crisis management is required"


30 Jun 2020


German Presidency of the EU Council

 Clear focus on economic upturn necessary

·       Create a coordinated crisis mechanism to protect the internal market

·       Set the course for open trade policy: finally conclude EU-China investment agreement

·       Ensure free trade between Great Britain and the EU

·       Create sustainability and resilience through market incentives

Frankfurt/Brussels – 30.6.2020 – After 13 years, Germany is taking over the EU Council Presidency again. "It is good that, with Germany, a leading industrial nation is now taking over the council presidency. Now active crisis management is necessary," says Thilo Brodtmann, VDMA Executive Director.

The corona crisis is a particularly heavy burden for the mechanical engineering industry. According to the latest VDMA survey, a total of 80 percent of companies are reporting serious order losses or cancellations. "The EU has not shown itself to be on its best behaviour with its national solo efforts and foreclosures. It is clear that such events must not be repeated. Helping the economy back on its feet must therefore be a top priority for the German presidency," says Brodtmann.

Recognising the importance of the internal market

The crisis has shown the immense importance of the internal market for a functioning economy. That is why a crisis mechanism is needed to prevent uncoordinated action in the future. "It is imperative that the German council presidency be used to further deepen the internal market, to remove barriers and to relieve companies," says the VDMA Executive Director.

For the mechanical engineering industry, open borders and free movement of machinery, plant and personnel are essential. Around 80 percent of German machine production is exported, of which around 45 percent is exported to an EU partner country. In fact, more than half of German machine imports come from an EU member state.

Open trade policy necessary

Brodtmann is worried about current protectionist tendencies: "Germany must work against this in the council over the next six months. The EU must not allow itself to be isolated." The course is now being set for an open trade policy. The mechanical engineering industry has a medium-sized structure and is therefore dependent on open markets. Europe therefore needs free trade agreements with its most important trading partners. In particular, the investment agreement with China, one of the most important trading partners for the European mechanical engineering industry, must finally be negotiated.

Bringing Brexit gently over the final stage

Negotiations on the regulated withdrawal of Great Britain are progressing laboriously and so far without success. A hard Brexit is coming closer. "This is bad news for the European mechanical engineering industry and above all for the British economy," says Holger Kunze, Head of the European Office of the VDMA. "The German council presidency should be used to finally find solutions and make fair, free trade between the EU and Great Britain possible from 2021. This is now more important than ever. Only in this way can good economic cooperation succeed after Brexit."

Driving sustainability and resilience towards a market economy

Sustainability and resilience do not come about through intervention, but through the right conditions and market incentives. The industry will continue to move towards sustainability even after the corona crisis. "To achieve this, framework conditions must be set which do not require small-scale bureaucratic implementation, but which stimulate change in a market economy and technology-neutral manner," says Brodtmann. The German council presidency must therefore work to ensure that Europe lays the foundations for this with reliable energy and information infrastructures, fair competition rules and a modern innovation and research landscape.

A photo of Thilo Brodtmann, Executive Director of VDMA, can be found here.

A photo of Holger Kunze, Head of VDMA European Office, can be found here.

The VDMA represents around 3300 German and European companies in the mechanical engineering industry. The industry represents innovation,

export orientation, medium-sized companies and employs around four million people in Europe, more than one million of them in Germany.