Economic crisis: Trump is not to blame for Germany's crisis
With some delay, Germans have officially received what they weren't really surprised by: the economic situation was and remains somewhat worse than the figures indicated. A few days ago, the Federal Statistical Office significantly revised its growth—pardon: shrinkage—figures for the past two years, pointing to a clear recession. If everything is being shaken up, how could the figures be right from the start?
This continued on Friday: The economy shrank not by 0.1 percent in the second quarter, but by 0.3 percent. This at least explains the supposedly robust reaction to the US tariffs: It wasn't quite that robust after all.
It feels like it doesn't matter anymore. Looking at decimal places in the rearview mirror is a trait of GDP-obsessed Germany anyway. This finding hasn't changed in the last six months: Industry is acutely threatened by high costs, especially for energy, new tariffs, and – despite the new government – the still uncertain framework conditions.
It's no wonder that companies are holding back on investments and their employees are holding back on consumption. Meanwhile, new economic sectors with young companies are struggling to grow due, among other things, to a lack of venture capital.
The structural problems are well known, and none of them can be changed overnight. But it all starts with decisions – and they aren't being made. The uncertainty in businesses and private households remains undiminished, and it's far too easy to blame this solely on global politics and a confused US president.
The Federal Government, and the Finance Minister in particular, are making the greatest contribution to the uncertainty. It would be relatively easy to explain to citizens that, despite the special funds for infrastructure and defense, savings must be made in the regular budget. However, the cabinet apparently couldn't convey the distinction, and so plans were made that were beyond all financial feasibility. As a result, Lars Klingbeil alternately portrays himself as investment king and austerity commissioner, only to ultimately resort to further loosening the debt brake—also a kind of dialectic.
The rest of the cabinet can't hide this. The Chancellor is making a name for himself in foreign policy, which admittedly shouldn't be any different these days. The middle class, which for years glorified Friedrich Merz as a savior, is nevertheless disappointed.
Meanwhile, two ministers are trying to keep separate what belongs together: A shrunken Ministry of Economic Affairs is competing with a new Digital Ministry and an upgraded Technology Department for attention and appointments with flagship companies. Economics Minister Katherina Reiche tried to tackle the pension issue, but it was rejected by her fourth neighboring department, the Labor Ministry. A long-overdue topic, but here again: confusing messages.
This means the opposite of the planning security and growth agenda that citizens and businesses hoped for from this government. If the coalition doesn't finally take its economic policy to the next level and agree on clear and reliable messages, not only this year but also the next will be a lost one. A bit of economic recovery, which is foreseeable despite everything and will surely be duly celebrated by the federal government, is certainly not enough.
rnd
