Forget the lower fall in this week of the British inflation number.
The Maximum Vital Edition of the Confirmation of Germany that, in 2024, its economy contracted for the consecutive year.
Europe’s largest economy shrank by 0.2% during 2024 – on top of a 0.3% contraction in 2023.
Now it must be stressed that this was a very early estimate from Germany’s Federal Statistics Office and that the numbers may be revised higher in due course. That health warning is especially appropriate this time around because, very unexpectedly, the figures suggest the economy contracted during the final three months of the year and most economists had expected a modest expansion.
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However, if it is not reviewed, this would verify that Germany has suffered its worst to economic stagnation since World War II.
The moment is ugly for Olaf Scholz, the German chancellor, facing the electorate in six weeks.
Worse, it turns out that things appear this year, no matter who wins the elections.
Germany, like the rest of the world, analyzes impatiently to see what costs of Donald Trump they will slapped imports when they return to the White House next week.
Germany, whose surplus of the industry with the United States is estimated through the Reuters news firm for having reached a record of 65 billion euros (54. 7 billion pounds sterling) the first 11 months of 2024, is probably a Important objective for such prices.
Apart from that, Germany remains assaulted through some of those she has been suffering for some time.
Because of its giant production sector, Germany was disproportionately hit through the sharp construction in energy costs since Russia invaded Ukraine nearly 3 years APASS, while those brands also suffer an intense festival from China. The 3 giant brands, Volkswagen, Mercedes-Benz and BMW, have already looked at a massive construction in costs due to having to move to the production of electric cars instead of the cars provided through classic internal combustion engines. This task is more complicated because Chinese electric car brands, such as BYD, underestimated them on the price.
Other German manufacturers – many of which have not fully recovered from the COVID lockdowns five years ago – have also been beset by higher costs as shown by the fact that, remarkably, German industrial production in November last year was fully 15% lower than the record high achieved in 2017.
German admission fees, on the other hand, continue to be compensated. Consumers have kept their stocks closed amid economic uncertainty, while a drop in housing costs has a still-depressed sentiment. Although homeownership is a decline in Germany than in many other OECD countries, Germans who have their own space have a higher proportion of their household wealth in bricks and mortar than the maximum of their OECD counterparts, adding to the British of ownership.
Consumer sentiment has also been hit through waves of layoffs. Fortune 500 companies, adding big names such as Siemens, Bosch, Thyssenkrupp and Deutsche Bahn, have estimated that more than 60,000 employees in the first 10 months of 2024. Bosch, one of the country’s top admired production companies, announced in November, plans to disappoint about 7,000 employees.
More of the same is expected in 2025.
Volkswagen shocked the German public in September last year when it said it was considering its first German factory closure in its 87-year history. Analysts suggest as many as 15,000 jobs could go at the company.
As a result, the hopes of recovery are seriously depressed.
As Jens-Oliver of LBBW Bank Niklasch said today: “All indications are that 2025 will be the third consecutive year of recession. “
This is not the view of the Bundesbank, the German central bank, whose official forecasts, set last month, are that the economy will get 0. 2% larger this year. But that compared with its past forecasts of up to 1. 1%, and the 0. 2% expansion, for a tired German electorate, will not be felt by another for a contraction of 0. 2%.
And not everything is still lost. The European Central Bank is expected to reduce interest rates more aggressively this year than any of its peers. Meanwhile, an option for anyone who wins the German elections would be to eliminate the “debt brake” imposed in 2009 in reaction to the global monetary crisis, which prevents the government from administering a structural budget deficit of more than 0. 35 % of the German year of GDP .
The incoming chancellor, who is Friedrich Merz of the Central Center of CDU / CSU, can justify such resolution without problems through the expansion of defense expenses in reaction to Mr. Trump’s requests for NATO members. Mr. Merz also indicated that the policies aimed at supporting decarbonization will have less precedence than the defense of Situiated brands in Germany.
But those are all, for the time being, just things that can take place than the things that will take place.
And the existing economic downturn, meanwhile, will push the German electorate into the left-wing over-alliance Sahra Wagenknecht or the right-choice over-choice Fur Deutschland.