Will Germany become the “sick man” of Europe again? Associations and economists are dealing with this question. There is also hope for the economy.
Business associations and economists see Germany in a difficult economic situation with many structural problems. “Our country is no longer a growth engine, but a brake pad – and as the largest economy in Europe,” said DIHK President Peter Adrian of the German Press Agency.
“We need to turn things around.” The economist Michael Hüther said: “The Ukraine war has relentlessly revealed how great the structural weaknesses are now.” Bitkom President Ralf Wintergerst said: “Germany is the most important economy in Europe – that still applies. But we have been making the mistake of resting on our laurels for years.”
When asked whether Germany was again the “sick man” of Europe, the “economic wise man” Veronika Grimm said: “I think you have to take the signs seriously. The economy has experienced two profound crises. First the pandemic, with the problems in the Supply chains and the slump in production in this country. Then came the attack on Ukraine, which had an impact on energy supplies and prices.”
A number of fundamental problems
The Federal Statistical Office is publishing data on economic development today. According to preliminary calculations by the authorities, the German economy failed to pick up again in the spring after a frosty winter. The term Germany as the “sick man of Europe”, which the British magazine “Economist” used to describe Germany at the turn of the millennium, is making the rounds again. The most recent edition of the “Economist” wrote on the front page: “Is Germany the sick man of Europe?”
Marcel Fratzscher, President of the German Institute for Economic Research, said: “Germany is not the sick man of Europe, but had an economically golden 2010s and is today very competitive globally. However, Germany could become the sick man of Europe again if it builds on its strengths now not used wisely to decisively advance the ecological, digital and economic transformation.”
Adrian, President of the German Chamber of Commerce and Industry (DIHK), sees a number of fundamental problems: high energy prices, a growing shortage of skilled workers, and a lack of infrastructure. “The good thing is that the problems can be solved. But it’s time to get started. If we seriously slim down at all levels, especially with the now excessive bureaucracy and complicated approval procedures, we can build on old economic successes again in the future.”
Crises mastered well?
According to Grimm, the high energy prices hit Germany harder than other countries because of the energy-intensive industry. “That’s why you have to be careful comparing the growth forecasts for 2023 one-to-one, if only because the economic slump caused by the crises turned out differently in individual countries. Spain shrank by eleven percent in the corona crisis, Germany only by five and a half – it is It’s only logical that the economy in Spain needs a stronger recovery to get back on track.”
Germany has mastered the crises well. “In view of the high energy prices, however, it was not to be expected that Germany would emerge from this crisis dynamically,” said Grimm. “On the other hand, there are still tasks ahead of us, you can’t downplay that.” She mentioned dependencies on China in trade and critical raw materials, the expansion of energy production and networks, digitization, the shortage of skilled workers, education and pensions. “And all this in the midst of the transformation to climate neutrality with its immense investment needs.”
increase competitiveness
The head of the institute of German industry, which is close to employers, Michael Hüther, said: “For years now, high corporate taxes and unit labor costs as well as an inefficient state apparatus have been dampening the investment mood. High energy prices, coupled with the shortage of skilled workers as a result of demographic aging and crumbling infrastructure, are destroying our last advantages. In particular there is a real threat of de-industrialization in the energy-intensive sectors.”
Wintergerst, President of the Bitkom digital association, said that there was a real danger that Germany would lose significant economic performance in the future. “To prevent that from happening, we must focus much more than before on increasing our competitiveness and promoting digital technologies.”
Fratzscher said the federal government should decide on a transformation program with three elements: “a reduction in bureaucracy and regulation with massive investments in excellent infrastructure, government investments in innovation, research and education, and a strengthening of the social systems so that Germany can better leverage its potential can and creates social acceptance for change.”
Source: Stern
