Germany is not the sick man of Europe, but it is "tired" and now needs "a strong cup of coffee". That was German Finance Minister Christian Lindner's reassurance about the health of his country's economy at the World Economic Forum in Davos in January. Since then, some indicators that have been in the red for months have improved, but concerns remain for patient Germany. After a recession in 2023 with a GDP contraction of 0.3%, the German government is forecasting growth of the same magnitude for the current year, rising to 1% in 2025. We cannot be satisfied," admitted Robert Habeck, Germany's minister for economic affairs and climate protection. Coffee is being served, but with a drip: it is the coffee pot that is not working, or rather the traffic light majority is short-circuited. Weak because it is divided, the red-green-yellow government of social democrats, ecologists, and liberal democrats is struggling to set the political and economic course for a Germany that, after 16 years of "pax merkeliana," has awakened to a reality very different from its reassuring past. In addition to the fractures in the executive branch, exogenous factors are weighing on the economy and slowing the recovery by intersecting with the endogenous features of the German model. These are the intertwined crises of recent years: weakening international trade, Covid-19, rising energy prices, Russia's war against Ukraine. Like a battering ram, rising gas prices and conflict have hit the walls of the self-confident German nation. The certainties that Germans need to guide their actions, such as markets where they can export “Made in Germany” and a friendly Russia from which they can buy energy at low prices, have disappeared. At the same time, China, the first market for German imports, is becoming increasingly aggressive, and relations between Berlin and Beijing have been marked by repeated tensions. With Russia's aggression against Ukraine, the myth of "change through trade" as Germany's ability to steer autocratic regimes toward democracy through trade has collapsed. The miracle weapon of exports as a guarantee of success through extraordinary trade surpluses (so much for the harmonious growth at the heart of the European integration process) has also been exposed. At the same time, despite the German government's calls for diversification in order not to repeat the mistake of dependence on Russia, German companies continue to pour capital into China, where their investments reached an all-time high of 11.9 billion in 2023. Germany must therefore reinvent itself if it wants to catch up in international competitiveness, where it is slipping further and further behind, as the president of the Federation of German Industry (Bdi), Siegfried Russwurm, stated. However, the government of Chancellor Olaf Scholz is not immune to the strategic short-sightedness that historically characterizes the ruling classes in Berlin. The ongoing dispute over increased public spending in the federal executive is preventing agreement on the 2025 budget and is emblematic of a Germany that is slowing down in order to worship the fetish of the "debt brake," the budgetary constraint in its constitution. The same dynamic is repeated in the EU. On the one hand, Germany wants to preserve its hegemonic role, albeit with difficulty, as the recent agreement on top EU appointments has shown.
On the other hand, Germany itself categorically rejects the great leap forward that would be made with the common debt, even if only to finance defense spending, as proposed by the European Commission. Germany may not be sick, but it no longer seems to be the locomotive of Europe. On the contrary, deprived of safe and innovative leadership, it is in danger of derailing.
