Germany, once seen as a model nation for centrist liberals, is currently facing political and economic turmoil. The country has been rocked by protests, strikes, and economic collapse. Germany's problems can be traced back to its embrace of green ideology, its democracy-dodging elites, and the hidden hand of US influence [2a781895].
Germany, Europe's largest economy, is experiencing a severe economic slowdown with a 0.3% contraction in 2023 and a growth forecast of just 0.2% in 2024 [2a781895]. This makes Germany the worst-performing large economy in the world [d9e7e9ea]. The decline in Germany's economy is attributed to several factors, including declining exports to China, high energy prices, rising military spending, and US influence [2a781895]. The US has coerced German companies like BASF and Volkswagen to leave China through the Interparliamentary Alliance on China (IPAC), a group funded by the National Endowment for Democracy and George Soros [2a781895].
The US has also been implicated in the bombing of the Nord Stream Pipeline, leading to high energy prices in Germany [2a781895]. The abandonment of nuclear power and the reliance on intermittent renewable energy sources have resulted in skyrocketing electricity prices and a decline in industrial activity [b804e538]. Despite recent falls, electricity prices in Germany remain high compared to historical and international standards, posing a competitive disadvantage for the German economy [21828c4a]. The costs of the energy transition, which aims to shift towards renewable energy sources, may cause prices to rise in the coming years. However, once the transformation is complete, the low costs of generating 'green electricity' could lead to a decrease in prices [21828c4a].
Germany's green policies have had a detrimental impact on its economy. The push for renewable energy has resulted in deindustrialization and a slowdown in trade. Germany's gross domestic product has been falling since the third quarter of 2022, causing fears of the first two-year-long recession since the early 2000s [e583fe4d]. High energy costs for consumers, with an average electricity price of 46 cents per kilowatt-hour compared to just under 13 cents in the United States, have slowed the economy and threatened the profitability of many companies. Around 67% of German companies have moved at least some operations abroad due to high energy prices and inflation. The deindustrialization is prevalent in sectors such as mechanical engineering, industrial goods, and automotive [e583fe4d].
Germany's military spending has increased by 42% over the past decade, driven by the conflict in Ukraine and US pressure [2a781895]. The German political class has suppressed dissent and failed to address growing public anger, leading to the rise of right-wing populism [b804e538]. The constitutional court in Karlsruhe has limited political debate and made perverse decisions, such as ruling that the government's spending plans were in breach of Germany's debt brake [b804e538]. Germany's elites have become complacent, resulting in a decline in infrastructure, public services, and technological advancement [b804e538]. Recent polls show a significant shift in public opinion that's increasingly opposed to the coalition government [e583fe4d].
Germany's economy remains distressed amidst factors such as soaring inflation, higher borrowing costs, and the lingering effects of the pandemic and the Russia-Ukraine war [a16e3fca]. The country's economic forecast for 2024 shows minimal growth, with risks heightened by its reliance on exports and labor market rigidity [a16e3fca]. Germany's industrials sector is particularly strained by high interest rates, skilled labor deficits, and extensive regulations [a16e3fca]. However, signs of easing inflation, stable unemployment, and low energy costs offer some optimism for recovery within the next year [a16e3fca]. France and the UK also have above-average distress levels, while Spain and Italy are seeing improvements. The real estate, industrials, and consumer and retail sectors are among the most distressed throughout Europe [a16e3fca].
Germany's economic weakness and dwindling growth forces have implications for the EU as a whole, as Germany's demand helps pull along the rest of the continent [d9e7e9ea]. The sluggishness of Germany's economy may pull down the rest of Europe at a time when the continent will face a huge bill for rearmament [d9e7e9ea]. However, there are some positive signs, such as the possibility of interest rates coming down, energy prices resuming their downward drift, and consumer sentiment starting to turn up [d9e7e9ea]. Germany's economy matters to the EU, European defense, and the UK as its second-largest export market [d9e7e9ea]. The commercial property market in Hamburg is in its deepest slump since the 2008-09 crash, creating opportunities to buy high-quality property at a cheap price. However, banks are not lending, and values and rents have fallen. The volatility in commercial property is due to the long years of near-zero interest rates. Some markets are booming while others are slumping, which is unprecedented [d9e7e9ea].
Europe's deindustrialization has led to economic decline and a backlash against green policies. Germany's industrial production has contracted by almost 14% in the past 6 years, causing an economic recession and bankruptcies. The pursuit of 'net zero' climate policies has made fuel and power prices high, making Germany's manufacturing sector uncompetitive. The economic meltdown extends beyond Germany, with industrial capacity being decimated across Europe. The burdensome costs of environmental regulations have led to a green backlash, with farmers, consumers, and trade groups protesting against the costs. The upcoming European Parliament elections could see a major shift to the right, with populist parties gaining votes. In contrast, corporate America is showing a turnaround in its views of climate policies, with some CEOs advocating for 'energy pragmatism' and criticizing the banning of fossil fuels. The outcomes of the upcoming elections in Europe and the US will determine the future of energy policies in both regions.