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ER Editor: See also this by Fortune —
Germany is unraveling just when Europe needs it most
(Bloomberg) — Germany is reaching a point of no return. Business leaders know it, the people in the country feel it, but politicians haven’t come up with answers.
That has set Europe’s largest economy on a path of decline that threatens to become irreversible.
Following five years of stagnation, Germany’s economy is now 5% smaller than it would have been if the pre-pandemic growth trend had been maintained. (ER: Was this part of the point of the ‘Covid’ bioweapon release?)
More worryingly, Bloomberg Economics estimates that the bulk of the shortfall will be tough to recover, due to structural blows such as the loss of cheap Russian energy and Volkswagen AG and Mercedes-Benz Group AG struggling to keep pace with China’s auto firms. The decline in national competitiveness means every household is worse off by about €2,500 ($2,600) a year.
With Chancellor Olaf Scholz expected to lose a confidence vote on Monday, snap elections offer a chance for a change of course, but the trend of gradual decay creates little sense of urgency. The risk is dull policy responses that lack the ambition needed to tackle underlying challenges.
“Germany doesn’t collapse overnight. That’s what makes this scenario so absolutely gut-wrenchingly terrifying,” said Amy Webb, founder and chief executive officer of Future Today Institute, which advises German companies on strategy. “It is a very slow, very protracted decline. Not of a company, not of a city, but of the entire country and Europe gets dragged down with it.”
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Trump’s EO 13818 has been responsible for recovering an enormous amount of wealth globally since 2017 – perhaps in the quadrillions we have heard rumoured. So we are taking this report as a surface impression, what we are supposed to believe about European finances.
A reminder that Habeck is a children’s author. ‘Merkel’ (2.0) regrets losing Russian gas, and Habeck (2.0?) wants to run for Chancellor. (We’ve left the RT links embedded within the report.) Grab the popcorn, folks.
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Germany’s economy ‘cornered’ – minister
Robert Habeck has questioned whether the country’s “business model” can continue to work
RT
Germany has been forced into a corner by underinvestment and policies pursued by other leading economies, Economy Minister Robert Habeck has said, after the central bank warned of a difficult year ahead.
In an interview with Bild newspaper published on Sunday, the politician, who intends to run for chancellor next year (ER: LOL), insisted that Germany can turn the situation around.
.
“Our business model is really cornered. Will it no longer work? It would be too early for me to throw in the towel,” Habeck said.
The minister noted that Germany has failed to make sufficient investment in its infrastructure, tax system and workforce skills, resulting in a “negative impact” on its economy.
Germany is an export-oriented nation that needs open markets, Habeck argued, in reference to US President-elect Donald Trump’s threats of major tariff increases. Trump warned in November that he would impose steeper duties on foreign-made cars to protect US jobs, a move that would disproportionately affect Germany.
Habeck also pointed to Chinese-made electric cars flooding the EU market and causing “a big problem” for the German automotive industry.
Car manufacturing is one of the key drivers of the German economy, accounting for approximately 5% of gross domestic product (GDP).
The Munich-based Ifo Institute for Economic Research estimates that future tariffs could cost Germany €33 billion ($34.6 billion), and that exports to the US could fall by 15%.
Germany does have a problem, “but one that can be solved,” Habeck told Bild, without elaborating.
On Friday, the German central bank slashed its growth forecast for next year to 0.2%, from the 1.1% level it had predicted in June. The regulator also said it expects the economy to contract by 0.2% this year, having previously predicted modest growth of 0.3%.
It would mark a second consecutive year of decline, after gross domestic product shrank by 0.3% in 2023, according to the Federal Statistics Office, Destatis. The agency attributed last year’s contraction to persistent inflation, high energy prices, and weak foreign demand.
A snap federal election will be held in Germany on February 23. Chancellor Olaf Scholz’s three-party coalition collapsed earlier this month after he fired Finance Minister Christian Lindner.
Source
Featured image source: https://www.ft.com/content/04fd5114-976d-4a6f-bf5a-176a0671757b
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