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Business

German companies reluctant to make investments next year

German companies across the board appear largely unwilling to make heavy investments in 2014. A fresh study has indicated their uncertainty about what the future German government might have in store for them.

Despite slightly more favorable cyclical developments, economic pundits believe German firms are unlikely to respond to improved markets by raising their investment activities throughout 2014.

According to a new study by the Cologne Institute for Economic Research (IW), only every third company in Europe's powerhouse is planning to increase their investments, while every sixth is intending to trim them.

The survey released Monday is based on a poll among 3,300 German companies of different size and representing a cross section of industries.

All eyes on Berlin

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Germany raises growth forecast

"The ongoing low investment levels in Germany are cause for concern," IW Director Michael Hüther said in a statement, adding the reluctance to invest continued despite a further pickup in employment.

He commented the only modest investments that companies were planning in buying new machinery would thus only marginally contribute to the predicted 1.5-percent growth rate for the German economy next year.

As coalition talks between Chancellor Angela Merkel's conservatives and the Social Democrats continued in Berlin, Hüther urged policy makers to have the courage and improve planning security for potential investors.

hg/hc (Reuters, dpa)

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