by Katja Hoyer
Thursday, 16
December 2021
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07:00

Europe’s biggest economy is on the brink

Germany's economic forecast is looking increasingly bleak
by Katja Hoyer
Credit: Getty

It wasn’t so long ago that the German media were reporting almost gleefully about the shortages of petrol and goods in the UK. Even serious newspapers proclaimed that the lack of food would be a permanent problem, not in small part due to Brexit. Apparently, we also have no more fruit and veg on the shelves and we might well have a sober Christmas this year as alcohol supplies have run dry.

Of course, there is no denying that supply chain problems are continuing to be a permanent threat to economic recovery from the Covid-induced slump, but this is not a Britain-specific problem. In fact it may well be the German economy — Europe’s largest — that emerges from the fourth wave of Covid battered and sluggish.

According to the Institute for Economic Research (Ifo), the German economy might even go into recession this winter. Based on new figures released this week, Timo Wollmershäuser, Head of Forecasts at Ifo, said in a statement that :

Ongoing supply bottlenecks and the fourth wave of the coronavirus are noticeably slowing down the German economy. The strong post-pandemic recovery that was originally expected for 2022 still hasn’t materialised.
- Timo Wollmershäuser, Ifo

While the Ifo’s report is very careful to avoid talk of ‘recession’, it has adjusted its figures to suggest that the German economy will contract by 0.5% in this quarter, followed by stagnation early in 2022. Inflation will also rise further, from 3.1% this year to 3.3% next year. Meanwhile increases in consumer prices are not expected to fall back to normal before 2023.

These figures may not make headlines in the way that long petrol queues in Britain did, but they are troubling nonetheless. Before the federal elections in September, a large-scale survey showed that around half of Germans were concerned about the rising costs of living. They now have a new centre-Left government promising to make life “affordable” again — be that in rents, mobility or energy costs.

Indeed, the cost of living had been a key election issue as many parties realised just how dire the situation had become for many households. Last year, in 10 Germany cities, rents had risen by more than 10% in the course of just one year. The costs of energy also rose by nearly 20%, the steepest increase in over two decades. Petrol is also at the second highest level it has ever been. A similar trend is at play in almost every other sector too from groceries to public transport.

Taken together, these statistics paint a bleak picture for middling and lower-income families who are struggling to make ends meet despite high employment rates. True, 8.4 million Germans in very low-paid jobs will benefit from the increase of the minimum wage to €12 (from €9.60) but this will not help the millions of Germans who earn above this threshold but not enough to make ends meet at the end of the month.

In addition, there are many policies in the new government’s roadmap for the next four years which are set to make things worse, not better. Coal and nuclear energy are to be phased out by 2030, exacerbating the shortage of affordable energy. The government also wants to phase out combustion engines, aiming for 15 million electric cars by 2030 — forcing those with older cars to buy expensive electric vehicles. Meanwhile, strict new covid restrictions are keeping a stranglehold over the economy.

Germany’s new government will have a huge task on its hands as it starts the post-Merkel era with promises of progress while introducing measures set to increase existing strains on an already battered economy. If the cost of living continues to rise under the new chancellor Olaf Scholz, Germans may quickly become disillusioned with the progressive optimism his new government seeks to project.

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Katharine Eyre
Katharine Eyre
9 months ago

The new German government is going to be an abject disaster.

David McDowell
David McDowell
9 months ago
Reply to  Katharine Eyre

Fingers crossed.

Katharine Eyre
Katharine Eyre
9 months ago
Reply to  David McDowell

After the latest scandal in Austria (think: corruption, lies, male networks with some serious homoerotic undercurrents, some really cringeworthy uses of emojis and 3 different chancellors in 55 days), there seemed to be a brief window of time where the current opposition (more or less the parties that are in the new German government, except for the Greens because they are in the coalition) were thinking about triggering new election. The possibility of achieving a copycat coalition here (green-red-pink) looked quite high.
Now the German government has started work and actually saying stuff, the enthusiasm for that among the Austrian electorate (funnily enough) has dropped right off. I’m just hoping we get the luxury of being able to watch that slow motion train wreck from a safe distance and neatly sidestep the disaster when the election does roll around.

David McDowell
David McDowell
9 months ago
Reply to  Katharine Eyre

Why no homoerotic overtones, are they shy or something?

Last edited 9 months ago by David McDowell
Ethniciodo Rodenydo
Ethniciodo Rodenydo
9 months ago
Reply to  David McDowell

Given their behaviour it is difficult not to wish our European friends ill

Chris Wheatley
Chris Wheatley
9 months ago

After many years of relative wealth Globalisation has hit Germany. The EU has been about two major political aims – paying French farmers to be inefficient and giving Germany the lead in manufacturing. Over the last 30 years Germany has wiped out many industries in other European countries.

All over the western world, especially in the United States, manufacturing has gone down and down to almost nothing. It will never return in the UK or in Germany. Good jobs are in decline. What is to be done with all of these people who expect a good life? What is the answer to this conundrum?

Woke. Equality. Taking money from the Boomers. Is there another answer?

David McDowell
David McDowell
9 months ago
Reply to  Chris Wheatley

And that’s before you factor in robotics.
Confiscation and redistribution is the answer, presumably dressed up in soothing language.
But how can it work but unless it involves taking from the hyper-rich, and how is that practical?

Chris Wheatley
Chris Wheatley
9 months ago
Reply to  David McDowell

The definition of ‘rich’ is the problem. I gues that if you live with parents in a rented house, have no job and no future – then rich is somebody who owns a house, any house.

David McDowell
David McDowell
9 months ago
Reply to  Chris Wheatley

Only if confiscation goes wider than the hyper-rich. But restricting it to the hyper-rich would be very difficult in practice.

Ethniciodo Rodenydo
Ethniciodo Rodenydo
9 months ago
Reply to  David McDowell

Taxing never mind confiscating from the hyper rich has always proved difficult to the point of impossible

David McDowell
David McDowell
9 months ago

I agree so let’s stop the pretence that what’s needed is them paying their fair share of tax (whatever that means). Let’s just cut to the chase, take their money off them and give it to the workers by way of reduced basic tax rates and increased personal allowances.

Ethniciodo Rodenydo
Ethniciodo Rodenydo
9 months ago
Reply to  Chris Wheatley

Just when you think things will never change that is precise when it happens

Matt M
Matt M
9 months ago

I ordered all my Christmas food (for twelve people, 4 days) earlier in the week from Ocado and some farm suppliers I use. Only one item – fresh fish stock – was unavailable for delivery on the 23rd. Who would have believed that I could order a case of wine, pigs-in-blankets or organic turkey this year? I thought we were on war rations due to Brexit.

We also finished wrapping presents yesterday – apparently Amazon and the other vendors are still doing next day delivery. I thought there were no drivers left on this benighted island.

Don’t tell me it was all Remoaner propaganda after all!

Katharine Eyre
Katharine Eyre
9 months ago
Reply to  Matt M

When I came over to the UK in October, I honestly thought there would be a lack of things right left and centre. No one I know has noticed any more empty shelves than normal and the only complaint I’ve heard was about some kind of croissant from Denmark no longer being available. And this, I am sure you’ll agree, is the firstest of all first world problems.

Matt M
Matt M
9 months ago
Reply to  Katharine Eyre

I know – for a few weeks Waitrose only had 4 types of pre-packaged Baba Ghanoush instead of 5 and the Guardian types reacted like the end was upon us.

Katharine Eyre
Katharine Eyre
9 months ago
Reply to  Matt M

I am laughing because I can imagine this only too well…but it is a sad state of affairs really. There was a time, not so very long ago, when getting baba ghanoush anywhere in the UK outside of perhaps a few restaurants in the bigger cities was impossible. I got through my entire childhood and early adult life without ever having tasted it! Can you imagine?
Slightly off topic (and I bet you didn’t see it coming) but I am re-reading E. Nesbit’s “The Railway Children” at the moment. A lovely story all about not letting the setbacks in life get you down and just getting on with it. As I’m reading it, I realise just to what extent that mentality has vanished. If it was written today, Phyllis wouldn’t be told she couldn’t have jam AND butter on her bread for tea. She’d be told “no, darling – no quinoa today” – and she’d need counselling for years afterwards.

Last edited 9 months ago by Katharine Eyre
Chris Wheatley
Chris Wheatley
9 months ago
Reply to  Katharine Eyre

Very funny comment.

Ian Stewart
Ian Stewart
9 months ago
Reply to  Katharine Eyre

I have gone my whole life without knowing what it is. Looked it up.
After a lovely 3 course meal in a heated pod in a pub garden today (wife, transplant), with Chilean wine, I feel fully sated and ignorant.

Matt M
Matt M
9 months ago
Reply to  Katharine Eyre

I asked my 9 year old daughter what she wanted for lunch. She said an avocado and hummus wrap and some blueberries.

I said when I was your age I had never tasted avocados, hummus, wraps or blueberries. I’m not even sure I knew of their existence.

Last edited 9 months ago by Matt M
Katharine Eyre
Katharine Eyre
9 months ago
Reply to  Matt M

I don’t have children but my 4 year old nephew is pretty much like this. Dinner (i.e. the midday meal in Yorkshire) for me when I was little used to be something like a cheese sandwich, beans/sardines on toast or a soft-boiled egg. Maybe a Penguin bar for afters.

Ethniciodo Rodenydo
Ethniciodo Rodenydo
9 months ago
Reply to  Matt M

I had to look it up
Must look for it next time I am in Tesco

Last edited 9 months ago by Ethniciodo Rodenydo
Benjamin Jones
Benjamin Jones
9 months ago
Reply to  Katharine Eyre

Had there been any real Supermarket shortages, everyone on Facebook would have been talking about it, except they weren’t. Only a desperate media begging for photo’s of empty shelves and gleeful remainers sharing stock photo’s from the first lockdown were ‘on it’.

Last edited 9 months ago by Benjamin Jones
James Joyce
James Joyce
9 months ago

It seems as though Olaf will be worse than Mutti. The Germans deserve to suffer for voting for these clowns. Mutti was the second worst German chancellor ever, but it seems she will have stiff competition.
Wake up, Germany! This is what happens with radical, extreme left policies.

David McDowell
David McDowell
9 months ago
Reply to  James Joyce

It’s what they voted for.

James Joyce
James Joyce
9 months ago
Reply to  David McDowell

Yes, that’s what I said. Morons. Like the people who voted for Biden. What were they thinking?

Trevor Law
Trevor Law
9 months ago

These problems are self-inflicted and were entirely predictable. You can’t demonise fossil fuels for decades and seek to crush investment in the sector without creating shortages, leading to higher and higher prices. Doing more of the same, as Germany plans to do (and the UK too), can only make matters worse. I suspect that it is merely wishful thinking to imagine that more investment in intermittent wind and solar can fix the problem, at least with current storage technologies.

JP Martin
JP Martin
9 months ago

A remarkable array of own goals.

Katharine Eyre
Katharine Eyre
9 months ago
Reply to  JP Martin

It’s almost as if they looked at the red-green coalition in Berlin, saw how well it’s turned out and said: let’s do this on the federal level too!
(irony off)
It will be what German-speakers call a “Super-GAU”. GAU = größter anzunehmender Unfall = the biggest disaster that can possibly be assumed or worst case scenario.

David McDowell
David McDowell
9 months ago
Reply to  Katharine Eyre

Let’s hope so.

Justin Clark
Justin Clark
9 months ago
Reply to  David McDowell

your kindness knows no beginning hehe

David McDowell
David McDowell
9 months ago
Reply to  Justin Clark

How very sage.

AC Harper
AC Harper
9 months ago

Maybe, just maybe, Brexit should have been seen as a canary in a coal mine warning of a creeping miasma of technocratic rule strangling economies?
All countries face a Goldilocks Control problem – not too much central control, not too little central control, but something just right (and it changes over the years). The EU counties are stuck with a ‘one size fits all’ central control problem and have nowhere to turn now that the ‘good times’ are no longer believable.

Jacqueline Burns
Jacqueline Burns
9 months ago
Reply to  AC Harper

And nor is the British purse available! 🙂

William Hickey
William Hickey
9 months ago

Paul Gottfried on the American Greatness website today explained all of this and more.

Channeling Lee Kuan Yew, Dr Gottfried pointed out that today in the West’s major cities and most well-educated and multicultural areas, people vote against who or what they hate.

And unfortunately, whites have been told for decades to hate themselves — or at least their parents and ancestors — and the civilization they built.

So China and India can enrich themselves and pollute the world by the West’s declared standards, while the West impoverishes itself abiding by them.

The West brings in and/or tolerates people who hate and fear them, while at the same time the West proclaims its love for all people, even though they don’t really believe it.

Hence the result: constant aggression on one side and self-loathing paralysis on the other. Preferring that your wives and daughters be gang-raped by Arabs — excuse me, “groomed” — than that you be considered a “fascist,” Nazi or Islamophobe.

Resist hate. Love the stranger. That’s what got you exactly where you are today.

Waist deep in the Big Muddy.

Last edited 9 months ago by William Hickey
Matt B
Matt B
9 months ago

The best reponse to certain EU states wishing misery on Brits would be to buy goods from elsewhere – and stop Union-Jack emblazoned Lidl, Aldi and the rest sewing up critical food and other sectors. Japan and Korea make great cars …

Last edited 9 months ago by Matt B
Nicky Samengo-Turner
Nicky Samengo-Turner
9 months ago

And electric cars will decimate the massive tier1 and tier2 automotive engineering supply base that is involved in the likes of engines, powertrain, transmissions and associated that electric cars do not need…

Nicky Samengo-Turner
Nicky Samengo-Turner
9 months ago

Ghastly place anyway…