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Ifo: mood in Germany's chemicals industry improves over power subsidy plan

According to a Tuesday survey, the expectations of companies in Germany's chemicals industry have improved dramatically in June. They are pinning their hopes on an upcoming reduction in electricity taxes for industry.

In June, the Ifo indicator of economic expectations for the sector reached 9.5 points. This was its highest level in three-and-a-half years. It had been -5.4 points in May.

The German government is planning to reduce electricity taxes for certain sectors.

Representatives from the retail, energy, and industrial sectors have criticised the plans, warning that they could distort competitiveness and have limited effect.

The average electricity price in Germany is 38 cents per kilowatt hour, which ranks fifth in the world.

Ifo added that the backlog of orders is extremely low.

Ifo noted that some companies benefit from lower raw materials costs and the beginnings of a recovery in international demand. However, the protectionist tariff policies of the United States, high location costs, and geopolitical uncertainties are also affecting the sector's growth.

Anna Wolf, Ifo's industry analyst, said: "In this context, the German government's state investments are giving urgently needed impetus."

(source: Reuters)