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Leaders | Economic malaise
Is Germany once again the sick man of Europe?
Its ills are different from 1999. But another stiff dose of reform is still needed
Nearly twenty-five years ago this newspaper called Germany the sick man of the euro. The combination of reunification, a sclerotic job market and slowing export demand all plagued the economy, forcing unemployment into double digits. Then a series of reforms in the early 2000s ushered in a golden age. Germany became the envy of its peers. Not only did the trains run on time but, with its world-beating engineering, the country also stood out as an exporting powerhouse. However, while Germany has prospered, the world has kept on turning. As a result, Germany has once again started to fall behind.
Europe’s biggest economy has gone from a growth leader to a laggard. Between 2006 and 2017 it outperformed its large counterparts and kept pace with America. Yet today it has just experienced its third quarter of contraction or stagnation and may end up being the only big economy to shrink in 2023. The problems lie not only in the here and now. According to the imf, Germany will grow more slowly than America, Britain, France and Spain over the next five years, too.
https://www.economist.com/leaders/2023/08/17/is-germany-once-again-the-sick-man-of-europe
Aug 17th 2023
Business | Angst
German bosses are depressed
And dissatisfied with the government
“We are at a dangerous point,” worries Arndt Kirchhoff, boss of the employers’ association in North Rhine-Westphalia and one of three brothers who run Kirchhoff, a maker of car components. Germany recently slipped into a technical recession. Many companies are investing abroad rather than at home. Chinese consumers are importing less after the lifting of pandemic restrictions than German manufacturers had been hoping. And Ukraine’s counter-offensive against Russian invaders is injecting uncertainty into Germany’s backyard.
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https://www.economist.com/business/2023/06/08/german-bosses-are-depressed
Jun 8th 2023 | BERLIN
Finance and economics | How the wheels came off
The German economy: from European leader to laggard
Its problems are deep-rooted, knotty and show little sign of being fixed
The 2010s were Germany’s decade. A Jobwunder (employment miracle) that began in the 2000s reached full flower, largely unimpeded by the global financial crisis of 2007-09, as labour reforms introduced by Gerhard Schröder, chancellor from 1998 to 2005, combined with China’s demand for manufactured goods and a boom in emerging markets to add 7m jobs. From the mid-2000s to the end of the 2010s, Germany’s economy grew by 24%, compared with 22% in Britain and 18% in France. Angela Merkel, chancellor from 2005 to 2021, was lauded for her grown-up leadership. Populism of the Trump-Brexit variety was believed to be a problem for other countries. Germany’s social model, built upon close relationships between unions and employers, and its co-operative federalism, which spread growth across the country, wowed commentators, who published books with titles such as “Why the Germans Do It better”. Germany’s footballers even won the World Cup.
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Aug 17th 2023 | BERLIN
Europe | Germany own goals
Germany is becoming expert at defeating itself
Bureaucracy and strategic blunders are starting to pile up
In “the twelve tasks of asterix”, an animated film from 1976, one of the feats the diminutive Gaul must perform is to secure a government permit. To do so he must visit a vast office called The Place That Sends You Mad. In a recent open letter Wolfram Axthelm, the head of the German Wind Energy Association, likened modern Germany’s infuriating bureaucracy to Asterix’s challenge. A particular gripe was the 150-odd permits demanded by Autobahn GmbH, a state-owned firm that runs Germany’s vaunted motorways, for transporting outsize components of wind turbines, such as blades. Between byzantine rules on load dimensions, faulty software, perennial roadworks and a lack of personnel to process complaints, a backlog of some 20,000 applications has built up. A company that recently trucked a turbine from the port of Bremen to a site in the northern state of Schleswig-Holstein found that although the distance is barely 100km (62 miles), road restrictions made the journey five times that long.
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https://www.economist.com/europe/2023/08/17/germany-is-becoming-expert-at-defeating-itself
Aug 17th 2023 | BERLIN
Le Monde, even quotes The Economist !
Germany’s slowdown is good news for no one
The German economy is going through a worrying slump. In addition to cyclical and structural difficulties, a fragmented political landscape is hampering the efforts needed to get back on track.
Published today at 12:31 pm (Paris)
Have the Germans caught the French bug? Doubt and self-flagellation seem to have taken hold of our neighbors on the other side of the Rhine, demoralized by economic indicators that accompany growth at half-mast. According to forecasts by the International Monetary Fund, Germany is likely to be the only G7 country to experience a recession this year.
Inflation, which is higher than in France, partly explains this underperformance. Other causes are inherent to the German model: the decline in industrial production is felt more keenly because Germany’s economy is more industrialized; competition, particularly from China, in the electric car market is hitting Germany harder because of the importance of the automotive industry. The fallout from the Covid-19 period and the impact of the war in Ukraine are particularly hard on a model that draws its strength from exports. It is symptomatic that the two countries whose economies have benefited most from globalization, China and Germany, are finding it harder than the others to recover. In fact, the German economy is the most China-dependent in Europe, an asset that has now become a handicap.
British weekly The Economist drove the point home with its fatal cover question this week, “Is Germany once again the sick man of Europe?”, bringing back the trauma of a previous resounding cover story which, in 1999, had decreed the same country “the sick man of the euro”.
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