October 13, 2022 - 10:10am
The International Monetary Fund has recently updated its world economic outlook, predicting a global growth rate of only 2.7% (compared to 6% in 2021). One of the worst performers is the Eurozone, which is expected to grow by only half a percentage point — and even that prediction could turn out to be too optimistic.
The problem is particularly acute in Germany, where borrowing costs are beginning to rise and the markets are noticing. The backbone of German innovation and a major source of future growth are its small to medium sized businesses. Almost 40% of total corporate turnover is generated by these enterprises, and they account for 55% of value added in the German economy. They also train the future industry workforce, and are responsible for 1.3 million of the 1.5 million training places in German companies. Keen innovators, smaller companies are often investing twice as much in research and development as their larger competitors. Unfortunately, the current crisis is hitting precisely this sector of the economy hardest, driving up insolvencies among Germany’s so called ‘Mittelstand’.
The tragedy is that the government in Berlin is doing next to nothing to reassure investors. Current proposals are not addressing necessary steps to maintain the country’s industrial base, but instead consist almost entirely of throwing money at the problem. The government wants to spend up to €200bn (almost 5% of GDP) to “shield” enterprises from energy shortages, but it is becoming increasingly clear that no money in the world can increase the supply of energy if, simply, there is not enough. The most important step would be to ramp up domestic energy production, but neither the Social Democrats nor the Greens have any realistic plans in this regard, with the exception of more wind and solar farms, which will not save Germany’s industry.
The problems in Germany go much deeper. As this paper shows, Germany is losing its competitive edge across the spectrum; from education where outcomes are stagnating to entrepreneurship where the number of startups is declining. German universities, once the envy of the world and the role model for America’s Ivy Leagues, have fallen well behind.
So, who will be the future investors in an economy that is losing its entrepreneurs? The answer for many Germans seems to be the state, in the hope that every problem can be papered over by massive government spending, entirely ignoring that more spending with less production will lead to ever more inflation.
But this is not the 1870s or 1930s, where, despite the economic depression, German companies founded in the 19th century maintained their innovative edge. The problem is that the current recession and its driver, a serious lack of energy, is part of a massive wave of deindustrialisation across the continent. That will be difficult to unwind, making this recession unique. Unless a significant course correction takes place, it will be the final one before a descent into a world of permanent European stagflation and economic decline.
Ralph Schoellhammer is assistant professor of International Relations at Webster University, Vienna.
Raphfel
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SubscribeGetting these people to relinquish then powers they have grabbed for themselves over the last year will be one hell of a job. They are psychopaths, pure and simple, across all the parties.
I’m pretty sure that it wasn’t always like this. The nature of politicians has altered – very much for the worse – over the last 25 years or so.
Good luck trying to make government give their powers back. There will always be a new threat, a new variant, terrorism, etc
“Is Covid just a conspiracy by politicians to grab more power? One of the problems with that theory is motive. ”
Motive is easy, there is a conspiracy by the ‘Global Elites’ to take over fully. As they (the Donor Class) fund most election campaigns (in USA totally) they own both parties. From rising as a youth to the House, Parliament, or Senate you must bend with the sources of money, selling bit of your soul at each step.
At the top is a hazy, almost invisible, collective who let it be known which way things should go, and so on down. Soros we know, but most are not known.
All government and industry works on Debt, this is economics 101. From Henry the VII, and every other government, this has been. Central banks make money and give it to the financiers who them loan it out, and loan it back to the Central Bank. In USA the Treasury Bond Market is all, for complex reasons, but debt is the main mechanism of gov and industry.
Going back into the shadowy times till now there have been families who control the debt, the Rothschilds, say, and a couple hundred others, and they run the world by influencing the money at all levels.
Now it is time to destroy the middle class as they have some ethics, education, money, and want a prosperous nation with stability. They have had the power in the West from the Glorious Revolution, now it is time they were broken as democracy will allow it by – what is happening.
MPs are probably very content to take their salaries and do nothing. Starmer has given up on Opposition and the Tories are just Johnson’s lap dogs so it is difficult to see what difference it would make having the MPs in the HofC
Note to the casual reader who suspects I’m wearing a tin foil hat , you can buy a book written by Klaus Schwab of the WEF on Amazon its called “Covid 19 The Great Reset” !
I was 50:50 about whether Johnson, Hancock etc were followers of the WEF Great Reset or just influenced by some followers. For example, Bill Gates whispering about vaccine solutions which just happen to fit in very nicely with WEF’s health reset plans! What I struggled to determine was why would the government continue to pursue the masks, distancing, semi strangled hospitality etc given where we now are. They could open up and still pursue a WEF Great Reset plan. Then it became obvious : the moment they admit to “normality” then parliament must resume. They like the current situation and it has nothing to do with any world plans.
It seems to me that blaming the government is too easy. If you don’t like something you might as well blame those in charge.
Opinion polls during the lockdown have shown that about 70% of the population agree with lockdown. UnHerd contributors don’t agree – it’s all a matter of ‘individual freedoms. Blame the government.
Many streets in towns and cities are no-go areas. Blame the government. Put cameras everywhere as a deterrent, which isn’t very effective. Blame the government.
Joblessness increases, give out more social security money. Become a nation of ‘scroungers’. New industry becomes unworkable because of environmentalists. Blame the government.
BAME / LGBT+ issues infect the whole world. Governments struggle because we haven’t met things like this before. Blame the government.
The only countries which don’t seem to be affected by these modern issues are China and Russia. Ugh! Their evil governments!
Ok, so now we understand. We want governments to be very strong, to resist the rise of things we don’t like but to keep out of the way with things we like. Don’t give money to the plebs – let them starve. Keep out immigrants and force our youngsters to do the dirty jobs. Did I hear Grammar Schools? How about National Service?
Give me young people any time. History just can’t be as important as the future.
I’m not really sure what your point is. Many of the problems you outline above can only be blamed on the policies of successive governments. There is nothing that we can do about these problems, and if we tried to do something about them we would be locked up.
The Russian and Chinese governments are indeed abhorrent but don’t think that Brussels, for instance, doesn’t see them as a model to emulate. Moreover, the Chinese and Russian governments are broadly competent, which cannot be said of many western governments.
My point is clear. The future is the most important thing. Negatives are useless. History is not always relevant; key figures in the past ruled because they were Dukes and Earls, not because they were clever.
We had/have a lockdown. Get over it and make positive plans going forward. We are stuck with LGBT+ issues because young people think they are important. They don’t have to be right; they are the next generation and it will be their world.
I rarely have read a post I disagree with as much as yours above, but it is fundimental to each of us, so no point of arguing, just a mention that I disagree.
No, I won’t just ‘get over’ being locked up for no good reason, made to wear masks just as Jews were made to wear stars and experimented on. Having our elderly killed by DNR and herded into lethal captivity. I want revenge on those who’ve done this to us and on the collaborators and fifth columnists who enabled it.
And just because a different generation has been brainwashed that critical race theory, LBGT, etc is normal doesn’t mean it is and they must be cured to save next generations from ruination.
I imagine you think having a govt that gets us and future generations in trillions of pounds in debt is normal, do you?