As of: February 1, 2024, 11:26 a.m
By: Fabian Hartmann
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The economic downturn, farmers' protests and the situation of the traffic light coalition are presenting Germany with major economic challenges.
Munich – The British daily newspaper
Financial Times
sharply criticizes the German economy.
In a recently published editorial (January 25), she describes Germany's economic situation as an "accident in slow motion, instead of an accelerating heavy truck."
The British newspaper is thus building on a statement made by Chancellor Olaf Scholz (SPD) at last year's World Economic Summit in Davos.
There, Scholz spoke of a “new German speed” that would set a new benchmark for economic reforms.
However, Scholz's promise failed to materialize, the
Financial Times
attests .
A look at the German economy, which shrank by 0.3 percent in 2023, makes this visible.
This made it the “worst-performing major economy globally” in 2023.
According to Finance Minister Christian Lindner (FDP), the economic downturn, which many analysts believe will continue this year, is a “wake-up call”.
At this year's World Economic Forum in Davos (January 15-19), Lindner tried to allay existing fears that Germany would once again become “the sick man of Europe”.
According to him, Germany is more of a “tired man” that needs a “strong cup of coffee” – with which the finance minister alludes to structural reforms.
Others are benefiting from the growing dissatisfaction with the governing coalition
According to the Financial Times,
the collapse of the German economy was accompanied
by political setbacks, nationwide strikes and a sharp decline in the popularity of the traffic light coalition.
And these are also the three broad areas on which the British newspaper bases its critical all-round approach to Germany's economic situation.
The population's dissatisfaction with the traffic light coalition is constantly growing.
The three government parties not only had to cope with an enormous decline in their combined vote share - while this was over 50 percent at the end of 2021, it has fallen by almost a third to date.
According to the Financial Times,
what is even more worrying for Germany and Europe is
the growing popularity of the right-wing extremist Alternative for Germany (AfD).
Not only did their anti-immigrant rhetoric strengthen the population's support for the party, but also the now widespread dissatisfaction with the governing coalition.
Confidence in the German economy is suffering – also because of the abolition of agricultural diesel subsidies
Scholz's failed plan to use the climate change fund worth 60 billion euros due to the ruling of the Federal Constitutional Court fell exactly into this line.
At the beginning of January, the canceled agricultural diesel subsidies for agricultural vehicles not only triggered days of protests from farmers.
According to
the Financial Times,
they primarily reinforced the impression that the German economy was not functioning.
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Because the cuts in subsidies are particularly damaging to trust in the German economy.
And that was already at a low level before that, because the increased energy costs had hit many households and companies hard.
Robert Habeck, Olaf Scholz, Christian Lindner © IMAGO
The current situation in the otherwise prestigious German auto industry is also problematic.
Given the global trend towards electric vehicles, they are currently having major problems remaining competitive.
At the same time, there is a major shortage of skilled workers, which could pose far-reaching problems for Germany in the future given demographic change.
The debt brake also plays a role in Germany's current economic situation
According to the Financial Times,
the lack of trust in the politics of the traffic light coalition is
reinforced by “quarrels and political mishaps”.
This is visible in an “ambitious but poorly implemented environmental policy” that calls on homeowners to replace gas boilers with heat pumps.
In addition, the heating law initiated by Robert Habeck (Greens) was so controversial that it had to be changed after a public outcry.
In contrast, some would question the effectiveness of huge subsidies for semiconductor factories.
The
Financial Times
also emphasizes that the traffic light coalition cannot be held responsible for all current grievances.
On the one hand, the entire Eurozone is being burdened by persistent inflation and rising interest rates, and farmer protests are also spreading in other European countries.
On the other hand, however, “a rigid limitation of the budget deficit” is partly responsible for the fact that for a long time it was not possible to invest enough in education and rail transport.
In addition, the federal government has made “an impressive shift away from Russian natural gas” and pushed through reforms to cut bureaucracy, promote skilled immigration and accelerate the introduction of renewable energy.
Nevertheless, the
Financial Times
sees the composition of the German government coalition as “an uncomfortable pairing” based on interests that are too different.
From the British newspaper's perspective, the high energy costs, inadequate digitalization and neglected infrastructure need to be addressed much more quickly in order to improve the economic situation.
According to her, a possible start to this could be to weaken the debt brake anchored in the Basic Law.
Because that would enable loans to finance public investments.