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 economy decreased to 0. 2% in 2024, in addition to a 0. 3% contraction in 2023.
Now, it is noted that this was a very early estimate through the German Federal Statistical Office and that the figures may be revised high in due course. This fitness accuracy is adequate this time around because, very unexpectedly, the figures recommend that the contracted economy in the last 3 months of the year and top economists expected a modest expansion.
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If revised, however, it would verify that Germany is suffering its worst bout of economic stagnation since World War II.
The timing is lousy for Olaf Scholz, Germany’s chancellor, who faces the electorate just six weeks from now.
Worse still, things seem unlikely to get better this year, regardless of who wins the election.
Germany, like the rest of the world, is eagerly watching to see what Donald Trump’s costs will slap imports in the face when he returns to the White House next week.
Germany, whose industry surplus with the United States is estimated via the Reuters news firm to have reached a record 65 billion euros (£54. 7 billion) in the first 11 months of 2024, is likely a major target for such prices.
Apart from that, Germany remains harassed through some of those she has been suffering for some time.
Due to its giant production sector, Germany has been disproportionate through heavy construction in energy costs since Russia invaded Ukraine just 3 years ago, while those brands also suffer from an intense festival from China. The 3 grains 3 motorists – Volkswagen, Mercedes, Mercedes, Benz, and BMW, were already hunting in massive construction on costs due to having to transfer to electric car generation instead of cars that are powered through classic internal combustion engines. This task has more complicated as Chinese EV brands, such as BYD, I have underestimated them on the price.
Other German brands, many of which have not completely recovered from Covid closures five years ago, have also been harassed through higher costs, as shown through the fact that, markedly, commercial production German in November last year in total of 15% under the record. Reached in 2017.
German admission expenses, on the other hand, remain compensated. Consumers have maintained their closed actions in the midst of economic uncertainty, while a fall in housing costs has a feeling even depressed. Although housing ownership is a decrease in Germany that in many other OECD countries, Germans who have their own space have a greater proportion of their domestic wealth in bricks and mortar than the maximum of their OECD counterparts, adding to the British property.
Consumer sentiment is also affected through waves of layoffs. German Fortune 500 corporations, adding big names like Siemens, Bosch, Thyssenkrupp, and Deutsche Bahn, estimated more than 60,000 workers in the first 10 months of 2024. Bosch, one of the country’s top supported production corporations, announced in November. It only plans to drop about 7,000 workers.
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.
Like Jens-Oliver Niklasch, from LBBW Bank, he said it today: “Everything suggests 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 expand through 0. 2% this year. But that from its past forecast of 1. 1%, and a 0. 2% growth of 0. 2%, for a weary German electorate, will not be felt more than a contraction of 0. 2%.
And everything is not lost yet. The European Central Bank decreases interest rates more aggressively this year than any of its peers. Meanwhile, an option for anyone who won the German elections would be to eliminate the “debt braking” 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 GDP German every year.
The incoming chancellor, who is expected to be Friedrich Merz of the central centre’s CDU/CSU, can easily justify such a move through the expansion of defence spending in reaction to Sánchez’s demands. Merz also indicated that policies for decarbonization will take less precedence than protecting Germany’s beleaguered manufacturers.
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 towards the over-alliance of the left-wing Sahra Wagenknecht or the right-wing over-choice Fur Deutschland.