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Dark clouds over Germany as an industrial location (here: BASF in Ludwigshafen) - or rather a silver lining on the horizon?
Photo: Michael Probst/AP
One might think that Germany has a subscription to scary stories.
Every few years, those gloomy prophets who see the country on the brink and prosperity at the end run into high gear in this country - especially industry is always on the verge of death.
Talk shows become horror shows in which Hans-Werner Sinn, Gabor Steingart and cronies wonder why the location has finally run out.
And why is this really happening this time, what has never happened before.
When Steingart prophesied the "descent of the superstar" in 2005, the longest phase of growth in ages followed.
It's so nice to lie next to it.
It may come to an end at some point.
It may be imminent.
Inflation is back, the German economy has to pay a lot more for energy - and in general everything is far too bureaucratic here (which obviously didn't bother the upswing so much).
But it may also be that the German desire for their own downfall is just taking on a life of its own again - and in the long run we won't lose that much prosperity.
So here and now: a crash check.
It is true that German industry currently has to pay much more for energy than, for example, the US industry, which is much less dependent on Russian gas, which is why prices there have hardly increased.
Whether that will be enough to melt the entire German industry (or its core, whatever that means) is questionable.
On the one hand, most of the competition is still based in Europe – and energy costs have risen similarly almost everywhere.
If it becomes more expensive for all competitors, there can be no competitive disadvantage.
Hardly any impact on most products
On the other hand, a few large users require the vast majority of the energy consumed by the economy as a whole.
As a study commissioned by the German Council of Economic Experts found, 90 percent of the total gas consumption in German industry goes into the 300 most gas-intensive products.
Or to put it another way: Even in industry, energy is hardly a cost factor for the vast majority of companies – on average, consumption per euro of added value is almost everywhere less than one kilowatt hour.
This is only significantly different in a few industries - for example in all those who produce glass, ceramics, paper, cardboard or metals.
Even in these sectors it is not said that companies are facing meltdown because of this.
After all, according to the experts, survival or ailment also depends on
In other words: It should only be really critical for companies that need a lot of energy and are also under strong competitive pressure - and don't have high profits to make up for lost sales.
And lo and behold: According to a systematic evaluation by the economists in the Council, only a few branches of industry are so unhappy.
Beverage manufacturers, for example, consume a lot of energy, but have high margins – and there is hardly any competition from overseas competitors.
Which significantly reduces the drama.
Conversely, manufacturers of electrical equipment compete strongly with non-European suppliers, but they need little energy and gas to do so.
In between are sectors such as the clothing industry, where the share of gas is high, but the overall energy costs are not so significant.
In addition, the margins are currently handsome, which helps absorb the shock.
If you exclude all these cases, in which there is no reason for an acute alarm for one reason or another, only a few very energy-intensive industries remain that are actually in acute danger, according to the conclusion of the experts: above all companies that manufacture glass , ceramics and textiles, and to a lesser extent those who produce metals.
It would be good to save what can be saved here - but above all to solve that energy dependency that other industries have long since solved.
Gas prices have long stabilized
Now to conjure up a meltdown of the entire industry is just absurd.
Especially since there has been a trend in the rest of the economy for years to get by with less and less energy - a trend that is now likely to accelerate again, according to the experts.
Studies have so far not found a systematic connection between energy prices and the competitiveness of the economy.
Historical examples of major energy cost shocks, such as in Japan after Fukushima, gave no reason to fear that deindustrialization would be triggered as a result.
When energy-intensive industries are dwindling in a country whose stated goal is to go energy-intensive in order to save the climate, then it's pretty absurd to complain that energy-intensive industries are dwindling.
All the more absurd is the whining that we are suddenly losing our prosperity.
It's not as if the Germans are suddenly no longer industrious - or that "Made in Germany" is suddenly not for sale.
Export is at a record level.
However, the Germans are currently getting noticeably less for their money because delivery bottlenecks after the corona lockdowns made some goods scarce - and there is a war that made everything to do with energy dramatically more expensive even before it broke out.
What matters is whether it stays that way.
In the meantime, the supply bottlenecks are disappearing, which is causing some prices to drop again.
The same applies to energy – even if the usual analysts currently consider it unlikely that gas, for example, will ever be as cheap as it was before the crisis: prices have fallen drastically in recent weeks.
As Berenbank chief economist Holger Schmieding calculates, according to current estimates, gas prices should be around 110 euros per megawatt hour in the next two winters.
That would be a good 100 euros less than assumed in September.
That alone should mean that Europe's total gas bill is likely to be three percent lower than the total economic output - the milder the recession will be, according to Schmieding.
Whole new tones.
Of course, even such a rapid correction of the energy prices, which have recently risen excessively, will not be enough to completely offset the rise in the cost of living from the past year.
Too many other prices have risen in the wake that will not fall again anytime soon.
But that doesn't have to mean a permanent loss of prosperity.
Especially since it depends on how many losses are offset by higher wages and state aid.
It wouldn't be the first time that commodity prices have collapsed after a speculation-driven price explosion.
This was the case most recently after 2014, when the price of oil fell from a good 110 to 50 dollars a barrel within a few months.
Miraculous increase in prosperity.
Such a development could still be promoted this time, because a lot is being done to solve the dependency on (Russian) oil and gas - and to expand cheaper renewable energy faster.
That would also speak more for a gain in prosperity than for a loss.
Especially since that would have the additional advantage that no one would ever think of awarding a World Cup to a country whose greatest qualification is that it promotes football with random gas profits.
No matter which way you look at it: The Germans will most likely not go under this time either – at least not in the core of their industry and in terms of prosperity.