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October 26, 2024 - 1:00pm
Sometimes it is hard to know who to believe during a crisis. Optimists in Germany might take solace in a recent Bloomberg report announcing that “the country’s economic downturn may be ending”. Unfortunately, the word “may” is carrying a lot of weight here. In the very same week that Bloomberg was predicting an improved economic outlook for Germany, there was a renewed barrage of bad news. It was revealed that the country’s five-year expected tax revenues will fall short by €60 billion, there is going to be a budget gap of more than €40 billion, and Germany is on course to enter its second recession year in a row.
Instead of disappearing, it seems as if the recession is spreading, hitting the backbone of the German economy: the so-called Mittelstand, the 3.1 million small- and medium-sized companies that make up 99.4% of all firms. These companies are not just crucial for innovation and the labour market, they also constitute a large part of the tax base. The very structure of the Mittelstand makes it difficult for its members to move assets around globally in the way huge companies like Google can, and whatever the tax burden is, it hits those small enterprises directly and immediately.
This also means that if they suffer, so does the tax revenue and the predicted massive shortfall demonstrates that there is nothing left to squeeze from smaller German entrepreneurs. Unsurprisingly, the IMF has now cut its growth forecast for Germany for this year and the next, from 1.3% to a meagre 0.8%, making it the slowest growing economy in the Eurozone and the G7.
Berlin’s answer to this problem is the planned creation of a “Germany Fund” to stimulate investment, but one should not put too much hope into it. After all, this new fund is being framed as a plan to create “a climate-neutral modern industrial future” according to Green economic minister Robert Habeck. This is a polite way of saying that Germany will yet again throw billions at the continuously failing energiewende (energy transition), which is one of the main reasons for Germany’s economic problems to begin with. The University of Cologne has calculated that government subsidies for renewables will reach €18 billion in 2025, €2 billion more than originally anticipated.
And while Habeck continues to dream green dreams, everything else continues to deteriorate. Remember the once hailed German punctuality? Well, according to national railway services there are plans to finally make trains run on time again — but not until 2070, more than a generation down the line. An official Government poll of 3,300 companies showed that 37% were considering cutting production or moving abroad, up from 31% last year. There is a sense of exhaustion that permeates the German public and its entrepreneurs, and that is made worse by a political class that appears to be entirely oblivious to the mounting problems in all areas of life.
Under these conditions, is it really a surprise that more and more Germans — literally and figuratively — are beginning to look for an alternative for Germany?
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SubscribeGermany just isn’t an attractive destination for talented innovative people these days. High taxes, crumbling infrastructure, layers of bureaucracy that strangle initiative and the formerly admired German efficiency, skyrocketing costs of living, crazy migration policies and all the attendant problems.
If you don’t have much and want to live nicely off the state, head to Germany. If you are wealthy, young, smart, want to earn money and be upwardly mobile – give it a miss.
As someone living and working in Germany, you make some valid points, but it’s not as bad as you make it sound.
Things fail slowly, then all at once…
Much the same here.
Idiot green fanatics making decisions which will impoverish normal people and small businesses.
But, they’re alright Jack. Public sector pensions and multiple hidden benefits means that they are insulated from the consequences of their extreme left ideology.
This is what happens when you believe your own lies.
And they wonder why people support the AfD. I guess you can solve that problem by banning opposition parties.
This is do sad. Dealt with several Hamburg mittelstands in the 1990s – wel run businesses with core.competencies, often multi-generational. From the data I’m reading Germany’s loss is Austria and Switzerland’s gain. The broader question is whither the EU with both Germany and France in trouble?
The EU’s destination is what it was always going to be…fracture and disintegration.
The attempt to impose a unified regime on such diverse nations was doomed to fail, having caused damage in the meantime.
Meanwhile, in Germany’s cultural alter ego, Britain…
Who would have thought it? Starmer’s government obviously thinks the Scholz coalition is a role model, which it proposes to follow to the letter. In present-day Germany, we in Britain see our future a couple of years down the line. What a delightful prospect!
Seems Ed Miliband is imitating Green Robert Habeck, Minister for Energy and Economics, former children’s book author and destroyer of the once successful German economy. Things can only get worse for Britain! My only hope is, that a President Trump victory might put an end to the nutty NetZero obsession of Western governments.
Do you think that climate change will go away just because you deny its existence? It really doesn’t give a damn what you believe or disbelieve ,it will go its own inexorable way irrespective of your 18th century free market superstitions and idolatry.
Do you really think climate change will go away because you drive an EV, put a solar panel on your roof, or because your government creates more wind farms? The environmental and economic tradeoffs required by all those solutions offsets any perceived benefits. Unless of course you are Elon Musk, who continues to be made richer by green subsidies and mandates. You could even go so far as to completely shut down the U.S. and EU economies and climate change wouldn’t “give a damn.”
Future technologies will cause today’s government mandated technologies to be thrown on a scrap heap. (Governments almost always bet on the wrong horses.) Nuclear advances are already starting this process. And natural gas already offers a solution with less tradeoffs than all the net zero, government preferred solutions on offer today.
You get what you vote for. I suggest big demonstrations.
I cannot help thinking that somewhere, someone is unfurling a “mission accomplished” banner.
It’s unlikely to be coincidental that most environmentalists also despise free markets.
Well, environmentalism is an intrinsically leftist ideology, that’s why the environmentalists are strongly against free markets, as you say, and any entrepreneurship, private property and everything that contributes to economic growth.
And once we also remember that ideologically the green movement has been Malthusian since its inception, there are no surprises about what exactly they pursue and by what means.
Although I would think that the green politicians’ incompetence has also been a contributing factor, along with their burning desire to ruin the economy.
Lesson learned, in German: you can’t pause a vertically integrated manufacturing process because the wind isn’t blowing today.
It seems like Herr Smarmer is following in Germany’s footsteps, not learning from their ineptitude
It’s hard to know all the reasons Germany is in steep decline but two stand out for me: replacing the DM with a weak DM (the euro) that resulted in exporters and ultimately Germany becoming complacent and the decision to get involved in the war in Ukraine.