Survey: Saxon economy still in crisis mode

The economic situation in Saxony has deteriorated noticeably following the oil price shock caused by the war in Iran. The sharp rise in energy and fuel prices following the recent geopolitical turmoil in the Middle East has further depressed the already fragile economic mood and dashed existing hopes of recovery. This is the conclusion of the latest spring economic survey conducted by the Saxon Chambers of Industry and Commerce, in which 1,697 companies with more than 82,000 employees took part.

According to the survey, many companies are facing rising fuel prices, high labor costs, restrained demand and ongoing uncertainty. This is leading to a tense liquidity situation: cost control is dominating business decisions and planned investments are once again being postponed in many places, it said. 29% of the companies surveyed were planning with decreasing budgets. Capacity expansions were only planned in one in five companies.

Hope of recovery fizzles out

In the majority of companies, the earnings situation has also deteriorated. Companies' employment plans were also more restrained. Only eleven percent planned to increase their workforce, while 22 percent expected a decline in employment. Companies are reacting to the weak economy and increased costs with restrictive personnel policies: new hires are being postponed, vacancies are remaining unfilled for longer and staff reductions can already be observed in some sectors.

Without noticeable relief in terms of costs, energy prices and bureaucracy as well as reliable economic policy framework conditions, there is a risk that the weak growth will become even more entrenched rather than the hoped-for economic recovery.