_ Dr. Ulrich van Suntum, honorary professor, University of Münster, former Secretary-General, German Expert Council for the Assessment of Overall Economic Development (SVR). 18. February 2024.*
Downhill all the way: No matter how you bend and twist it, almost all forecasts and assessments point Germany’s economic path downwards. Yet there is no will on the part of the traffic light government to change its desastrous policies.
Helmut Schmidt had known it: “Anyone who votes for the Greens will later reproach themselves most bitterly,” he commented on the founding of the party forty years ago. He did not have to live to see how right he was.
Less than halfway through the period of the “traffic light” legislature, the German economy is at rock bottom. The OECD has lowered its growth forecast for 2024 to 0.3 per cent, half that of the eurozone as a whole. Of all the industrialised countries, only Argentina (!) is doing even worse. And things are only expected to improve slightly in the coming year. Germany will continue to be the drag on Europe’s economy.
Slowing down and devaluing performance in the name of progress
What a decline of the former model economy and economic locomotive. And it is no accident. After all, the self-proclaimed “progress coalition” left no stone unturned that could harm the local economy. The nuclear phase-out alone, at a time of extreme energy shortages, was a shambolic move that only made people shake their heads abroad. Even the EU has now recognised nuclear energy as climate-friendly and cost-effective. But while it is experiencing a veritable renaissance in France, Poland, Sweden, the Czech Republic and the UK, the German Greens have stubbornly stuck to their “no thanks” ideology. But that was by no means all.
The citizen’s income also had to be introduced and the minimum wage increased, the latter even bypassing the commission responsible for this. In 2020, a statutory lower limit of 12 euros per hour was set by decree for a good fifth of all employment relationships. Good for employees at first glance, but a further cost factor for companies that are already struggling. Small retail and catering businesses in particular have now greatly reduced their opening hours or given up altogether. They simply can’t find any more people or can’t pay them, especially as the tax burden under the traffic lights has risen to unprecedented heights. have risen to unprecedented heights.
Mass immigration of unskilled labour leads to a dead end
At the same time, the influx of immigrants to Germany continues unabated. In 2022, a staggering 2.7 million new arrivals came to the country, including a good million from Ukraine. The latter, at least, are mostly educated and can integrate well culturally. Nevertheless, unlike in other countries, they rarely find their way into the labour market, preferring instead to receive citizens’ benefits.
This applies all the more to “refugees” from North Africa and Arab countries, who are often illiterate. Even of the new arrivals from the first wave in 2015/16, only just over half have a job so far, and of these, only two thirds work full-time.
Overall, the unemployment rate of employable refugees is 30 per cent per cent, which is around five times higher than overall. In addition to cultural problems, this causes immense costs. And even in the longer term, the welfare state will not be relieved by immigration not relieved by immigration, contrary to what the traffic light would have us believe. On the contrary the already existing sustainability gap in the social security systems calculations by the Freiburg financial scientist Bernd Raffelhüschen by immigration by a further 5.8 trillion to a total of 19.2 trillion euros.
The Greens persist sticking to their wrong track
Despite this, Berlin’s government politicians are still telling their old wives’ tales: Immigrants will pay will pay our pensions, sun and wind wind don’t send a bill, electric cars are are emission-free and so on and so on. The worst thing about it is that at least the Greens actually actually believe this nonsense. Even the Minister for Economic Affairs Robert Habeck has admitted that that the German economy is no longer competitive. competitive. But his recipes are ineffective, because he wants even more of the poisoned green medicine: Billions in subsidies for “green” energy and for products such as computer chips, where Germany is hopelessly countries from the Far East are hopelessly inferior to other countries from the Far East. This is money thrown away money that all citizens have to pay. Habeck is shovelling valuable water water into the desert and doesn’t even realise doesn’t even realise that he is only draining the few only drains the few oases that are still flourishing.
Economy needs relief
A recent study by the Leibniz Centre for European Economic Research shows what really needs to happen instead. On behalf of the Family Business Foundation, the Mannheim-based researchers have compiled their international comparative index of location attractiveness for the ninth time. Germany has slipped a further four places compared to 2020 and is now only in 18th place among 21 comparable countries.[1] This is in line with other location studies, such as the current ranking by the IMD World Competitiveness Centre in Lausanne. There, Germany has fallen to 22nd place. [2]
The ZEW researchers see one of the greatest weaknesses the ZEW researchers in the tax burden of companies. It is the highest in Germany highest of all the countries compared, with the exception of Japan. Further negative items are the high labour costs coupled with low productivity and high energy prices. And last but not least, the “paralysing regulatory burdens” that still overgrow all of this.
What is particularly alarming, however, is that Germany, which is poor in raw materials, can no longer score points even in education and human capital. Yet this has always been our great strength. Here too immigration plays a central role, but not a good one, as the ZEW has found. Not only are there too many too many unqualified people, the high proportion of migrants in schools also hinders the educational educational opportunities for native children. The only thing we are still good at financing costs, according to the ZEW not least because of the German debt brake. But as we all know, the traffic lights are already working hard to to abolish this as well.
Notes
[1] Stiftung Familienunternehmen (2024). Länderindex Familienunternehmen 2023. URL: https://www.familienunternehmen.de/de/studien-und-buchpublikationen/studien/laenderindex-familienunternehmen
[2] IMD (2023). World Competitiveness Ranking 2023. URL: https://www.imd.org/centers/wcc/world-competitiveness-center/rankings/world-competitiveness-ranking/
* Original publication in the German newspaper “JUNGE FREIHEIT”.