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It’s no secret that Germany’s economy is in crisis.
What’s less obvious, and far more concerning, is why none of the major German parties are prepared to address what ails it.
Just today, the economy ministry revised its economic outlook again. We’re now down to 0.3% growth in 2025 from the already low 1.1% forecast expected three months ago, Handelsblatt reports.
Germany’s GDP has been stagnating for five years.
At this point, the slump is structural. Not just the usual ups and downs of economic cycles.
High energy prices, an ageing workforce, a lack of innovation, and a changing world economy put a question mark behind Germany’s once-mighty export model.
And what do the mainstream parties have to say about it? Not much.
The governing Social Democrats and Greens focus on calling for more public spending, which is undoubtedly part of the solution.
But their pet projects, such as artificially reducing energy prices through subsidies, only risk wasting money on energy-intensive industries that have – anyway – no future in Germany.
Subsidies are a crutch, not a cure, for long-term competitiveness.
The main solution of conservative election frontrunners CDU/CSU, meanwhile, is corporate tax cuts. Although there is no convincing financing plan.
Even CDU/CSU Chancellor candidate Friedrich Merz isn’t quite sure. He recently said in an interview these tax cuts are meant to be phased in until 2029 and will have to be “earned” through good economic performance.
But if the tax cuts can only be implemented if the economy is growing again, how can they be the recipe to bring growth back in the first place?
The answer is bleak.
So, Merz’s main instrument for bringing back growth seems to be good vibes.
“Economic policy is 50% psychology,” he has said, exposing that part of the CDU’s economic agenda is to spread optimism and hope that this, in itself, will give companies confidence to invest.
But businesses weighing up whether to invest in Germany aren’t really looking for vibes. They want stability, clarity, a plan.
The conservatives, the SPD, and the Greens all seem equally unwilling to face the real problems for fear of alienating a key electorate.
One elephant in the room? The looming baby boomers’ retirement will drown public finances.
Germany’s politicians, however, still hope to get elected without answering the inconvenient questions.
A reckoning awaits.
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(MM)
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