Germany condemned to decadence by green demagoguery and austerity on investments
Pessimism reigns in Germany : “The industry is in a critical situation,” Siegfried Russwurm, president of the Federation of German Industries (BDI), told the DPA news agency, predicting layoffs. “We are in a serious economic crisis,” said his counterpart from the employers' association (BDA), Rainer Dulger, who is usually more cautious. “Peter Adrian, head of the Chamber of Commerce and Industry (DIHK), tried to put things into perspective.
A decadent economy
Published in mid-December, the forecasts of the three main economic research institutes contradict those developed by the government as the basis of its fiscal policy . According to the IFO, the IW and the DIW , GDP growth will be between 0.5% and 0.9%, compared to the 1.3% calculated by the Ministry of Economy. “Uncertainties are delaying the recovery, as they increase consumers' propensity to save and make businesses and families less willing to invest,” summarized Timo Wollmershäuser, President of the IFO. The fact that all economic research institutes indicate lower growth than expected by the government is also significant for the fact that the budget deficit, calculated as a percentage of GDP, will be higher than what Berlin has narrated.
Business sentiment plummeted in December: 23 of 47 sectors surveyed by the Institut de l'économie (IW) expect a decline in output. Only 9 expect an increase. Particularly affected are the chemical, steel, paper, ceramics and glass sectors, which consume around 80% of industrial energy and were the basis of German economic growth in the past. Yet these industries represent only 15% of the secondary sector's value added. Retailers, for their part, are complaining about a poor December, despite the approaching holidays.
Structural weaknesses
Economic weaknesses have been known for some time: rising interest rates and energy costs, reduced purchasing power and geopolitical upheavals are weakening a largely export-oriented industry in particular. But these arguments are no longer sufficient, as we hear in the public debate. “Energy prices and interest rates are high for everyone. The problem is that others grow while we shrink,” said IFO chief economist Clemens Fuest. Who remembers the effect of Kaldor's second law on productivity? You will see that in the next few years the Germans will appear very unproductive…
According to the latest annual report drawn up by the Building Credit Bank (KfW), German municipalities – traditionally the source of half of public investments – suffer from an investment backlog of 160 billion euros. Net state investments have been negative since 2002. A strategy that has favored the "Debt Ceiling" and austerity over the provision of effective infrastructures, and now the country will have no debt, but it also does not have modern motorways, efficient networks, trains all 'avant-garde. Because the debt is left to the children exactly like the assets it generated.
“The biggest threat to the country today is the fact that the state has lived on a shoestring for the last twenty years,” says Marcel Fratzscher, president of the DIW Institute. According to his estimates, further investments are needed, both public and private, amounting to 100 billion euros.
The sensational ruling of the Constitutional Court on the German budget, which requires the ex post accounting of credit commitments, seems to have stunned a political class already obsessed for some time by the ghost of debt. Seeking 17 billion euros in savings by 2024, the coalition has begun making tentative cuts to fossil fuel subsidies – around 60 billion euros a year – in line with the government contract.
Social discontent
At the same time, with broad public support, farmers organized demonstrations to protest against the cut in diesel subsidies. In a context of wage discontent, the movement is likely to spread. A new event is scheduled for the second week of January. The Bundestag's FDP party – the party from which Finance Minister Christian Lindner comes – has vetoed any increase in farmers' bills. Economists see these protests as a revival of special lobbies.
The population is starting to no longer understand the reason for the extreme environmentalist policies that affect the production infrastructure, but they still do not understand how measures such as the debt brake have been devastating in the medium to long term. But things change and only by overcoming green-liberal demagogy, allies in this campaign of destruction of the German economy, will Germany be able to be reborn. Otherwise it will only be a painful path towards increasingly rapid decline.
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The article Germany condemned to decadence by green demagoguery and investment austerity comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-germania-condannata-alla-decadenza-da-demagogie-verdi-e-austerita-sugli-investimenti/ on Sat, 30 Dec 2023 15:06:08 +0000.