German industry in crisis?

2 min read

The people of Berlin witnessed a strange sight in recent weeks. Almost two weeks already when tractors shut down roads in Berlin, in the meantime German truckers protested in front of the Brandenburg Gate. End of last year and early 2024 was a stormy period for German public, which have several reasons. Europe’s former economic engine, the famous German industry is struggling, and now it is a patient of the old continent, which could drown the whole region. An economy that has seen better days has also been hit by many disasters in recent years. It is hard to say, which decisions caused the difficulties, it is a complex issue, the effect of which are amplified, nor can we ignore the circulating trends of economic systems, which are natural processes in every period.

Without claiming to be complete, here are some factors that strengthened the current crisis. It could be already 13 years ago, but the 2011 earthquake in Japan and the following tsunami causing the disaster in Fukushima had a major role in reducing the German economy. The phase-out of nuclear power plants, the return of fossil-powered power plants, the energy exposure and the resulting insane environmental protection policy – ass well as its high price – led to an energy dependence that affected high-quality industrial production and reduced competitiveness.

The Covid pandemic shocked the whole world and left economies everywhere at a standstill. This crisis was followed by the Russo-Ukrainian war, as a result of which not only a huge market was lost to the German industrial concern, but also the confidence index of the world economy was shaken. In addition significant additional expenses were generated with the support of Ukraine as well as the increase in military expenses. Due to the faulty migration policy, dissatisfaction has also arisen within the country, social spending is putting an ever greater burden on the central budget.

Of course all of these problems would not cause problems with appropriate government action, but Olaf Scholz and the Ampel coalition that came to power in 2021 are not on top of the situation. It is not by chance that the chancellor’s popularity was at a record low. The 0.3% economic decline for the year 2023 is a negative feedback, which was only compounded by the decision of the Constitutional Court at the end of 2023, which cut off the 60 billion euro injection intended to compensate the budget deficit. This led to a series of farmers’ demonstrations, because the government was forced to cut the agrodiesel subsidies intended for them.

At the same time, we cannot be unfair, the Scholz coalition was given an economy that looks bright on the surface, but is actually at a competitive disadvantage. During Chancellor Merkel’s time, there were no expensive green investments, and the German car and heavy industry soared, but now the competition have worked off their competitive disadvantage here too, e.g. it is also difficult to compete with the cheap energy resources of the Chinese and the USA. However this is not an excuse. The German coalition partners, which are pulling in different directions, are taking contradictory measures one after another, not to mention that in the meantime 10 billions of euros are going to support Ukraine, both in the form of military equipment and financial support.

The domestic political situation is not made easier by the increasingly strong AfD, which recently got involved in a scandal by participating in a meeting with a surreal theme. But let’s be honest, such ideas can be heard every day, and not only in the bars of East Berlin, but also in the corridors of the Bundestag. The discourse on the banning of the AfD is nonsense on the one hand, and it demonstrates a worrying lack of ideas on the other hand. The extremist party apparently brings up topics that concern the German population, the country’s big cities are becoming ghettoised, social spending is increasing, and there are no signs of successful assimilation anywhere, neither culturally nor economically. You have to realize that not one million doctors and engineers came to Germany.

Thus, the government instead of dealing with the problem, understanding the causes, and trying to convince society of another working solution, it puts the fascist stamp on the problem. It is almost incomprehensible that representatives and ministers of the ruling party are protesting together with those protesting against the AfD! Shouldn’t they act, take action against extremism, aren’t they in the government?

To sum up, Germany is going through difficult times, a series of wrong political and economic decisions were necessary for this, but unfortunately they will not bear the consequences alone. All surrounding European countries will be affected by the German crisis.

It is an oft-mentioned mantra that Europe’s economy is based on German high technology, high added value human resources, political rationality and cheap (hard to say, but Russian) energy. We miss all of them.

Leave a Reply

Your email address will not be published. Required fields are marked *

This website uses cookies to provide user authentication. Please indicate whether you consent to our site placing cookies on your device and agree with our Privacy Policy. To find out more, please read our Privacy and Cookie Policy