Germany, Once a Powerhouse, Is at an Economic ‘Standstill’
Germany, Once a Powerhouse, Is at an Economic ‘Standstill’
The economy shrank last year and is not predicted to grow much in 2024. Farmers are angry, industrial output is falling and the government is bickering.
The economy shrank last year and is not predicted to grow much in 2024. Farmers are angry, industrial output is falling and the government is bickering.
Germany started the year with Berlin’s streets choked with tractors and farmers blaring horns in furious protest of proposed budget cuts. Then train engineers walked off the job to demand better pay, stranding commuters and carloads of freight and leaving the country angry and gridlocked.
The same could be said for the state of the German economy. Last year it contracted 0.3 percent, official figures showed this week, making it not only the largest economy but also the slowest growing among the 20 countries using the euro. Industrial production has fallen five months in a row.
“The economy is at a standstill in Germany,” said Siegfried Russwurm, the president of the Federation of German Industries. “We don’t see any chance of a rapid recovery in 2024.”
Since it was rebuilt after World War II, Germany has been Europe’s main driver of economic growth, becoming an industrial powerhouse known for vast factories and fine-tuned engineering.
But now its automakers must compete with relatively cheap electric cars from China, and it vies with the United States to attract tech giants. There is a growing realization that Germany has not been successful updating its industry with sufficient flexibility and digital know-how to remain competitive.
People were telling Germany for a decade that their over-reliance on Russian gas was a massive problem. Instead they publicly laughed at idea and doubled down. When the cheap gas faucet was abruptly turned off in 2022, suddenly Germans were paying piles of money for every loose scrap of gas available. Many factories ground to a halt or became uncompetitive.
A lot of other European countries depended on Russian gas. Some even more than Germany. That's not the main reason for the slow recovery from COVID and the energy crisis. Germany let a lot of it's infrastructure rot and is now facing the consequences. Additionally there are ideological debt restrictions in place, hindering the government to start a stimulus program, while a lot of other countries are doing exactly that.
The point is that if you cannot make money in Germany, you're dumb. It's not about gas or energy. It's cheap as it was earlier but they're much more taxes.
The problem is the laziness of the industry and service sector. They haven't been making progress but stagnated for decades hoping to just make money from status quo. Now they blame everyone but themselves just to distract from their mismanagement.
But the reality is, when you don't make money, someone else will do.
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North Stream 2 didn't happen. Industry expected it to happen. Also, our ex-chanslor is Putin's buddy and Gazprom board member for some reason.
Loans are no longer free. Industry expected loans to be free forever. Also, our current chanslor forgot all the details about all his meetings with people involved in Cum-Ex.
Working population has been decreasing for decades. Industry expected to compensate with overtime and worse working conditions. Also, skilled foreigners prefer countries where the police doesn't reliably lose all evidence in neo-nazi cases.
Industry invested billions into a brand revolving around Kanye West.
Industry has been responsible for several global car emissions scandals.
Industry bought Monsanto.
Industry pays their top-level management ludicrous bonuses for laughable goals.
Pretty sure we just need to eat the rich.
Also Merkel basically did everything to not change the status quo and her government even actively sabotaged renewable energies and made it almost impossible to invest money into future technology.
They were even PROUD to not make any debt when Germany was one of the few countries that would get paid by the banks for making debts.
Now the retirement fund is starting to eat up the available money more each year since the main voting group of the CDU are retired people and they didn't want to change anything about how that system works even though it's in dire need of reforms especially with the boomers now getting into retirement.
The working population has not decreased for decades at all. It has peaked around 2022, I'm pretty sure.
This is the best summary I could come up with:
Germany grew rich in recent decades by selling its goods to the world, racking up a trade surplus that strained ties with the United States under President Donald J. Trump.
But that would mean changing the Constitution, which requires a two-thirds majority in Parliament, implying a level of cooperation between the opposition and the government that is unthinkable in the current political environment.
Economists have warned that taking a red pen to spending instead of raising taxes — a move vehemently opposed by the fiscally libertarian Free Democrats, the smallest party in Mr. Scholz’s coalition but the one that controls the finance ministry — will be a further drag on the economy.
That, coupled with an increase in wages won after labor actions like the train engineers’ strike, could encourage German consumers to spend more, albeit at the risk of fanning further inflation.
He pointed to the country’s growing green tech sector as a bright spot in the economy, those industries that develop technology for environmental protection, renewable energies and the efficient use of resources.
Intel and Taiwan Semiconductor Manufacturing Company plan to build factories in eastern Germany, helped by subsidies worth €20 billion, which have survived government budget cuts.
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Maybe they just need more doctors and engineers to come over to help the economy grow.