As of: February 23, 2024, 11:09 a.m
By: Lars-Eric Nievelstein
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Europe is increasingly recovering from the global crises.
There are signs of a turnaround in the economy.
Only Germany is lagging behind – and is slowing growth in Europe.
Hamburg – Across all sectors, associations are warning about the federal government’s inaction.
They demand less bureaucracy, fewer taxes and more attractiveness for Germany as a business location.
The Growth Opportunities Act is intended to fulfill some of these wishes, at least in theory.
However, there is a problem with implementation: first the CDU/CSU parliamentary group blocked the law, then the traffic light coalition tried to reach a compromise and put the red pencil on it.
Meanwhile, the economy in Europe has turned the steering wheel towards recovery - without Germany.
Eurozone Purchasing Managers Index |
48.9 points |
|---|---|
Purchasing managers index growth limit |
50 points |
Purchasing Managers Index Economy in Germany |
46.1 points |
Projected economic growth in Germany in 2024 |
0.2 percent (federal government) |
The European economy is setting sail for growth
A trend reversal is expected in the Eurozone.
At least that's what the so-called purchasing managers' index, which the financial service provider S&P Global and the Hamburg Commercial Bank (HCOB) publish regularly, showed.
Here, S&P and HCOB survey the purchasing managers of large companies because their departments are always the first to sense when a trend reversal is imminent.
For the Eurozone, the index rose for the fourth time in a row and is now at 48.9 points.
To explain: As soon as the index climbs above 50, it is considered a sign of economic growth.
“The euro zone is gradually moving out of recession,” said Norman Liebke, economist at HCOB, in the
world
.
Thomas Gitzel, chief economist at VP Bank, spoke of a delicate “economic sapling”.
For the services sector, the index has already reached the growth threshold of 50.
The Temnalona and Terralona models in Brussels, which represent the Earth by day and night.
While Europe as a whole is increasingly recovering from the global crises, things are looking rather “bleak” in Germany.
(Symbolic image) © IMAGO / CTK Photo
The European statistics office Eurostat is not entirely up to date, but supports this assessment with various figures.
It published growth in European industrial production for December 2023.
Industrial production rose by 2.6 percent in both the euro area and the EU.
In the fourth quarter of 2023, gross domestic product in the euro area remained largely unchanged, with employment increasing by 0.3 percent.
There was also an increase in the construction sector, with production increasing by 1.3 percent in the European Union between November 2023 and December.
These figures are initial estimates from Eurostat.
German industry under pressure – “Looks pretty bleak now”
However, Germany's economy is facing another recession.
According to S&P, the index fell by 0.9 points to 46.1 points in February.
“The German economy remains under pressure,”
Reuters
news agency quoted Tariq Kamal Chaudhry, an economist at HCOB, as saying.
Industry in particular is a “pain patient” in the German economy.
The corresponding barometer fell to 42.3.
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“Things are looking pretty bleak for German industry now,” explained Chaudhry.
High interest rates, expensive energy, geopolitical risks and the weak global economy – all of this adds up to a major problem for the industry.
Production is declining, new orders from home and abroad are “deteriorating drastically”.
The gross domestic product in Germany shrank by 0.3 percent between October and December 2023 compared to the previous quarter, the Federal Statistical Office (Destatis) announced on Friday (February 23).
This confirmed an earlier estimate.
There would have been stagnation in both previous quarters, but that is now over.
“In the final quarter, declining investment slowed down the economy, while consumption increased slightly,” said Statistics Office President Ruth Brand.
Without Germany, Europe could already grow
A core problem for Germany was high inflation, which weakened the purchasing power of private households.
The European Central Bank, in turn, raised interest rates to respond to inflation, which subsequently hit the construction industry in particular.
Because of the higher financing costs, many house builders said goodbye to their house building plans.
Demand collapsed.
At the end of 2023, construction investments fell by 1.7 percent.
Exporters in Germany, on the other hand, suffered from the weak global economy;
As an export nation, the Federal Republic is highly dependent on purchases from abroad.
What is particularly bitter about the comparison of the indices between Europe and the Federal Republic is that Germany is included in the Eurozone figures.
Without the braking effect that Germany is exerting here, the Eurozone indices would be significantly closer to the 50 mark. In January, for example, Spain saved the Eurozone from recession.
Growth Opportunities Act is a long time coming – “The Union is taking the entire economy hostage”
Meanwhile, the federal government tried to find suitable solutions to the various problems facing Germany as a business location.
When presenting the annual economic report, Economics Minister Robert Habeck said that the nation was emerging from the crisis “slower” than hoped.
In it, the traffic light coalition lowered its growth forecast for 2024 from 1.3 to 0.2 percent.
The Growth Opportunities Act is not coming quickly enough for the industry associations.
“Postponing the Growth Opportunities Act is damaging Germany as a business location.
The proposed relief is correct, but it comes late and is far too little.
In the crisis, the federal, state, government and opposition must finally pull together,” said Dr.
Dirk Jandura, President of the Federal Association of Wholesale, Foreign Trade and Services (BGA) with.
Otherwise, trust in the economic actions of politicians would continue to decline.
“The Union is taking the entire economy hostage in order to relieve the burden on agriculture.”
With material from Reuters