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Merkel win could be good for German family businesses

The return of German chancellor Angela Merkel and the current coalition government at next week's general elections would be the best outcome for the nation's family firms, according to an organisation representing some of Germany's largest family-run companies.
GErman chancellor Angela Merkel
© Press Association

The return of German chancellor Angela Merkel and the current coalition government at next week's general elections would be the best outcome for the nation's family firms, according to an organisation representing some of Germany's largest family-run companies.

Professor Brun-Hagen Hennerkes, the chairman and founder of Stiftung Familienunternehmen, told CampdenFB the present government, comprised of the Christian Democrats – led by Merkel – and the Liberals, support only minor reforms to the current system of taxation – one of the most important campaign issues for family businesses.

The Christian Democrat party has been in government since 2005, and was previously in coalition with the Social Democrats between 2005 and 2009.

The main opposition parties, the Social Democrats and the Greens, plan to dramatically increase taxes on wealth, inheritance and income, which Hennerkes reckoned would deplete the equity family businesses' had available for investment.

The elections will take place on 22 September.

Germany's major political parties have similar policies on the European Union, energy and social investment, so taxation and the possible introduction of a national minimum wage have been the main battlegrounds on the campaign trail.

Hennerkes said the present coalition had protected family businesses to a certain extent by avoiding tax increases, but said his organisation had hoped for more, particularly in regards to market deregulation and simplification of the tax code.

He said: "There has been too little investment into Germany's infrastructure. Roads, railways and airports are at the limits of their capacity and [are] starting to show strains."

According to Hennerkes, uncertainty over tax had been a challenge for family businesses in recent years, with the possibility of sharp tax hikes should a new coalition come to power affecting their ability to plan for the future.

The continuation of the eurozone crisis, the lack of skilled labour in certain sectors and rising energy costs were also issues Hennerkes reckoned the next government would need to address to support family businesses.

Germany is the strongest economy in the European Union, and the fourth-largest economy in the world. It owes a lot of its strength to its family-run firms, which account for 92% of all companies in the country, generate 51% of sales and provide 60% of jobs.

According to recent research published by Deutsche Asset & Wealth Management, a division of Deutsche Bank, a continuation of the present Christian Democrat and Liberal coalition is the most likely outcome.

It is improbable the Christian Democrat party will lose power, the research said, although it could be forced to form a coalition with a new partner.  

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