Alone 10 Billion 2023 - Dax-Companies receive Billions in Subsidies from the State
Germany's largest stock market conglomerates have earned triple-digit billion euro profits in recent years - while receiving high state subsidies. At least 10.7 billion Euros flowed to the 40 DAX companies in 2023 - nearly double the amount from the previous year of 6 billion. According to an analysis by Flossbach von Storch Research Institute, a think tank of the same name Cologne wealth manager with over 70 billion Euros in managed customer assets.
While subsidies were around 2 billion Euros per year until 2018, they increased significantly in the following years. A total of approximately 35 billion Euros in state funds went to the largest stock market conglomerates from 2016 to 2023.
"The extent to which profitable companies are supplied with public funds has drastically increased over the past few years," wrote analyst Philipp Immenkötter. The total amount is conservatively estimated, as companies have room to determine what they report as subsidies in their financial statements. The numbers are noteworthy, as the Federal Government is simultaneously pushing for budget savings.
For the study, data from the DAX companies in their financial reports were evaluated. The number of DAX members increased to 40 in the autumn of 2021 due to a reform, so the current 40 DAX members were traced back to 2016 to avoid distortions.
Eon and Volkswagen received the most funds
There are arguments for subsidies, writes Immenkötter. They can support companies and save jobs in crises like the Corona pandemic. However, the question arises, "whether there is a necessary economic need to support or promote the DAX companies to this extent with taxpayer money." Thus, the net profit of the DAX companies amounted to 117 billion Euros in 2023 according to the study.
The energy company Eon received more than 9.3 billion Euros in subsidies since 2016. The majority came from the electricity price brake law and the natural gas heating price brake law, which replaced customer payments or reduced purchase prices. In addition, Eon reportedly received various state investment grants. Volkswagen followed with 6.4 billion. The automaker received tax incentives and research funding for drive and digital technology. BMW came in third place with 2.3 billion Euros, including grants for building sites.
Crises and climate change as drivers of subsidies
11 of the DAX companies received more than one billion Euros in subsidies from 2016 to 2023, it was stated. The median (average) was around 200 million Euros. Indirect subsidies, such as the environmental bonus for private households when buying electric cars, were not included in the study - they are an indirect subsidy for the automotive industry.
The increase in subsidies is mainly due to the decisions of the traffic light government and the Grand Coalition, wrote Immenkötter. Among other things, the goal of transforming the economy and supporting it during the Corona pandemic and the Ukraine war was mentioned. The funds came from the Climate and Transformation Fund and the Economic Stabilization Fund.
Is the economy becoming dependent on state money?
It is to be expected, however, that a large part of the funds will be replaced by private money. Subventions also led corporations to invest in business fields, where it is unclear whether they will be profitable in the long term. "Possible consequences of subsidy politics are resource waste, distortion of competition, and an economy's dependence on state funds."
- Despite earning triple-digit billion euro profits, German Dax-companies like Volkswagen in Frankfurt am Main received substantial subsidies from the Federal Government, totaling 10.7 billion Euros in 2023.
- Analyst Philipp Immenkötter from the Flossbach von Storch Research Institute noted that subsidies for profitable companies have significantly increased, with DAX companies receiving approximately 35 billion Euros from 2016 to 2023.
- Volkswagen was one of the top recipients of subsidies, receiving over 6 billion Euros, primarily in the form of tax incentives and research funding for drive and digital technology.
- The research institute's analysis revealed that Eon, another prominent German company, received the most subsidies, with over 9.3 billion Euros since 2016, mainly from electricity price and natural gas heating brakes laws.
- The Federal Government's push for budget savings is a notable contrast to the increasing subsidies, raising questions about the necessity of supporting DAX companies to such an extent with taxpayer money.
- The automotive industry, including companies like Volkswagen, benefited from indirect subsidies such as the environmental bonus for buying electric cars, but these were not included in the study's evaluation.
