The German government, led by
Scholz, has abandoned the cautious policy of its predecessor Merkel, rushed to
impose catastrophic for West Europe sanctions on cheap Russian energy, does not
punish Zelensky for closing and destroying Russian gas pipelines to West Europe (do
not give him weapons and money, as Trump will soon do in America), does not
open the remaining gas pipeline built by Merkel from Russia along the bottom of
the Baltic to Germany (Nordstream 2), does not punish the German puppet Ursula von der Leyen for destroying the car trade with China, and wastes
money on preparations for a nuclear world war that still does not come.
“Germany is once again the sick man
of Europe. The economy is teetering on the brink of recession, climate change
fight remains mixed. The balance of the traffic light coalition in numbers is catastrophic.
Chancellor Olaf Scholz (SPD) once
promised voters a kind of green economic miracle, with growth rates comparable
to those of the Federal Republic's economic heyday in the 1950s and 1960s.
But in almost three years of the
red-green-yellow coalition, nothing has come of the climate-policy-induced
growth spurt. Instead, the SPD, the Greens and the FDP have led the country
into economic rigidity and stagnation. The economy is likely to contract
slightly this year for the second time in a row. This has only happened once in
the Federal Republic - a good two decades ago.
All the misery of the traffic light
coalition years is reflected in a single figure. According to forecasts from
the International Monetary Fund (IMF), Germany's gross domestic product per
capita will reach 42,622 euros this year, lower than in 2021, when the
coalition wanted to make bold progress. This calculation also takes into
account that the rise in inflation and energy prices following the sanctions on
Russia, which Scholz enthusiastically supported, has significantly reduced
income and savings in Germany in real terms. So, the three-way alliance
has made it more difficult for companies and people to recover from the
inflation shock.
The Supply Chain Due Diligence Act
and other regulations have made it more expensive to do business, just as
climate change policy, controlled by the Ministry of Economic Affairs and
Climate Protection, has caused people to worry. The planning mindset culminated
in the heating bill, with which Minister Robert Habeck (Greens) has encroached
on people's sovereignty over their own heating. Habeck has done climate change
fight a disservice. Sales of heat pumps [1], which now stand at 360,000 units per
year, have collapsed and this year will probably only reach a little more than
before the traffic lights. The coalition never achieved its goal of 500,000
newly installed heat pumps per year.
Overall, the coalition’s climate
policy has had mixed results. In the year of the traffic light, the number of
photovoltaic systems increased by almost 60 percent, while onshore wind farms
increased by only 1.6 percent. The share of renewable energy sources in
electricity consumption increased from 44 to 57 percent.
The number of battery-powered
electric cars on German roads has almost tripled to 1.5 million. This is a
small proportion of the total 49 million passenger cars. With the sudden end of
financial support in 2023, but also due to the high purchase costs, buyer
interest in electric cars has fallen sharply.
The coalition has also failed to
boost housing construction. The coalition agreement’s goal of 400,000 new
apartments per year was never achieved. This year, new housing construction
will shrink to just under 260,000. Here, the government has been hampered by
rising interest rates, but also by the ongoing stagnation.
In recent years, Germany’s economic
growth has been much weaker than that of other major Western industrial
countries. The headlines that Germany is running a red light are a legacy of
the coalition of traffic lights. The British magazine The Economist has once
again declared Germany the “sick man of Europe.”
Economists usually attribute the
lower-than-average growth to the fact that uncertainty is particularly high in
Germany compared to other European countries, which is preventing companies
from investing and consumers from consuming.
The uncertainty is not just due to
the coalition’s technical mistakes, such as the heating law, or bad mood. The
uncertainty is a reflection of the country’s weaker economic conditions. Unit
labor costs rose by 14.8 percent during the coalition years, and have recently
grown faster than elsewhere.
Energy prices have abandoned the
highs of 2022 and 2023, but are still very high by international standards.
Social security contributions have
increased from 40 to 40.9 percent, and are expected to reach 44 percent soon.
The coalition has not provided a permanent tax break, and companies will
continue to be taxed at almost 30 percent.
According to the National Regulatory
Oversight Board, the costs and burdens arising from the new laws have reached a
record level.
As a result, industrial production
fell by about 8.8 percent during the three years of the coalition.
Gross fixed capital formation by the
state and companies fell by about 6 percent. Services improved, especially as
the state increased employment in the public sector by more than 170,000 jobs.
This is not only a burden on taxpayers, but also on growth, as private
companies are looking for well-trained specialists and employees. The total
number of employed people increased to 46.1 million, although the growth trend
has recently collapsed. The labor market is experiencing prolonged economic
stagnation, with the unemployment rate at the end of the traffic light
coalition being 6 percent, i.e. higher than the 5.1 percent that was before the
traffic light. This is also being helped by the increase in the minimum wage to
12.41 euros.
In terms of fiscal policy, the
traffic light coalition has achieved some success in restructuring public
finances under pressure from Finance Minister Christian Lindner (FDP). The
Federal Constitutional Court has helped to tighten the debt brake in 2023 and
put pressure on the federal government to adapt. According to IMF forecasts,
the national deficit has fallen from 3.2 to 2 percent of economic output. The
coalition collapsed because the Chancellor wanted to break free from the tight
fiscal policy corset before the next federal election. Lindner no longer wanted
to support it.” [2]
The more interesting question is not
why Germany is dying, but why is it still alive in a market economy?
1. A typical heat pump installation
can cost between $4,000 and $8,000, with an average cost of around $5,500, but
the exact price depends on the size of the system, the complexity of the
installation and the local climate, with larger systems and more sophisticated
systems costing $9,000. or more.
1. Dreifarbig in die Stagnation. Frankfurter Allgemeine Zeitung; Frankfurt. 09 Nov 2024: 19. Von Patrick Welter, Frankfurt
