Olaf Scholz is not the type to ignite crowds. Your monolithic, marmoreal face, it’s even rather… boring. This March 10, 2023, however, in front of an audience of journalists, the German Chancellor is cheerful. Soon, he announces, the country will experience a new “Wirtschaftswunder” (economic miracle). As during the golden decades (1950-1960). A year later, Germany is in recession and a rain of criticism falls on Scholz. No miracle, therefore, but the worst economic record since the Schröder years. Inflation, energy and housing crisis, demographics at half mast… The indicators are flashing red, even if Berlin, with little debt, retains a financial margin of maneuver that many envy.
We still need to be able to act. “The three parties in power [NDLR : sociaux-démocrates, verts et libéraux] don’t agree on anything, criticizes a keen observer in Brussels. Everything is blocked and will remain so until the federal elections in 2025.” A boulevard for the far right (AfD), which could soon become the second party in the country. Is Germany sick? It is unfortunately our diagnosis and this is very bad news because faced with a bellicose Russia and at a time of a possible return of Trump, Europe, on the contrary, needs a strong Germany.
EPISODE 1 – In Germany, the AfD is ever more extreme and ever more… popular
EPISODE 2 – War in Ukraine: Olaf Scholz, a difficult diplomacy that annoys the Elysée
EPISODE 3 – Failing trains, bridges in poor condition… Germany, a country in need of reconstruction
EPISODE 4 – In Germany, the end of an era in the history of social dialogue
For a long time, life was good in Gütersloh. Calm and serene like the waters of the Dalke which flows through this town in North Rhine-Westphalia. A few old half-timbered buildings, and then the enormous headquarters of Miele, the manufacturer of luxury household appliances. A polished image of Germany’s economic power. Huge profits, job security, comfortable salaries. But everything changed at the start of the year. There, Markus Miele and Reinhard Zinkann, the two bosses and heirs of the founders, announced an “adaptation” of the company model. An understatement to describe a drastic austerity cure: 500 million euros in savings by 2026, and nearly 2,700 job cuts all over the world. In Gütersloh, 700 jobs will disappear, purely and simply transferred almost a thousand kilometers further, to the Polish factory in Ksawerow, where all the washing machines will be produced. Worse, it is in the United States, in Alabama, that the new Miele factory will open at the end of the year to produce the brand’s ovens and other cookers, representing nearly 45% of turnover. .
Miele or the embodiment of the German hangover. After a golden age of a decade, Germany wakes up today, dazed. Last year, the country fell into recession: GDP fell by 0.3%, and it is expected to grow by at best 0.3 to 0.5% this year, the worst performance in the euro zone. An economic crisis coupled with an energy, social, demographic and democratic crisis. “The anxiety of decline is palpable in all segments of society,” explains Tobias Gehrke, researcher at the European Council on Foreign Relations. The German model based on a powerful and exporting industry, boosted by very cheap Russian gas and contracts with Beijing, was swept away by the war in Ukraine and the slowdown of the Chinese locomotive. “German power was built on the myth of happy and open globalization. The return of protectionism everywhere on the planet is disrupting its software,” explains economist Marcel Fratzscher, director of the powerful think tank DIW.
Certainly, the country still has very good assets: a very low unemployment rate (3.2%), stratospheric trade surpluses, reduced debt. And it is still among the five most innovative countries on the planet, according to the number of patent filings. Still, the nation doubts itself. Households took the full brunt of the energy shock which destroyed their purchasing power last year, and, even though wages have risen and inflation has clearly fallen in recent weeks, morale is no longer there. Really. The housing crisis is on everyone’s lips. While housing starts have plummeted, finding housing, particularly in big cities, is a headache. And the worst is yet to come. There could be a shortage of 720,000 housing units in 2025, and nearly 830,000 in 2027, according to the committee of real estate experts responsible for advising the government. If we add the deplorable state of the roads, telecoms infrastructure, and the endemic delays of Deutsche Bahn, the investment needs are considerable. But how to finance them when the State remains on dry bread and water?
“We must get away from this crazy logic of public debt reduction,” alarms Marcel Fratzscher. Behind this budgetary subject, a cultural question – hatred of debt. And a golden rule enshrined in the constitution, the Schuldenbremse – the debt brake which stipulates that the public deficit at cruising speed cannot exceed the mark of 0.35% of GDP. At the current rate, in twenty-five years, the German debt will have completely disappeared. “But the political micmac of the current coalition complicates any relaxation of public spending,” laments Yann Wernert, researcher at the Jacques-Delors Institute in Berlin. The liberals of the FDP, led by Christian Lindner, the Minister of Finance, vetoed it, partly to reassure their electorate. A pure political calculation, and too bad if we have to sacrifice the economic future of the country.
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