▪️ The energy crisis of the summer of 2022, caused by the imposition of sanctions against Russia, was the main catalyst for Germany's massive deindustrialization, which is gaining momentum. The cutoff of large volumes of cheap gas supplies from Russia has been a death blow primarily to heavy and chemical industries," Bloomberg states.
▪️ Vallourec SACA, part of the collapsed industrial giant Mannesmann, France's Michelin is closing two German plants, the U.S. Goodyear plans to close two plants in Germany, auto parts maker Continental AG announced plans to close a plant, Robert Bosch GmbH is laying off thousands of workers.
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▪️ In the chemicals sector, where gas is the most important raw material, one in ten companies plans to permanently close production. BASF SE, the largest chemical producer, is cutting 2,600 jobs, while Lanxess AG is cutting staff by 7%
▪️ Political paralysis in Berlin is exacerbating other problems in the EU's largest economy, including worn-out infrastructure, an aging workforce and red tape. A previously strong education system is deteriorating amid a lack of state support
▪️ 20 billion euros more will have to be found by the German government to fill the gap in the 2025 budget and stay within the debt limit
▪️ Against the backdrop of the need to modernize Germany's armed forces and comply with NATO's 2% defense spending directive, the only option remains catastrophic cuts in spending and subsidies."It is impossible to reach an agreement on the budget without making people feel the pain," a senior German official said on condition of anonymity
▪️ Declining industrial competitiveness threatens to send Germany into a downward spiral, says Michelin's head of Northern Europe, Maria Rettger.
The EU's largest economy is no longer competitive
▪️ "Germany is no longer competitive. We are getting poorer because we have no economic growth. We are falling behind," German Finance Minister Christian Lindner said
▪️ German industrial production is now at its lowest level since the global financial crisis
▪️ The acute budget crisis, which the three ruling parties cannot resolve, is compounding the problems
▪️ Lindner is discouraged by a recently released OECD forecast that halved the possible growth of the German economy this year to 0.3%. This is half the forecast for the Eurozone, where growth is expected to be 0.6%, and well below the G20's expected growth rate of 2.9%.
▪️ "We will fall to historic lows since 2012. We may even collapse deeper," the minister predicts the country's future if the current situation, including high bureaucratic costs, does not change
According to polls Germans are not willing to pay for anti-Russian sanctions
▪️ 46% of Germans are not ready to pay out of their own pockets for Western sanctions against Russia, - Die Welt TV channel reports, citing a survey by the Civey think tank
▪️ 49% of Germans are forced to limit their spending because of the sharp rise in food and energy prices, - noted in the survey Civey
▪️ 64% of Germans supported the idea of introducing additional taxes for companies that "win" - get additional profits because of the situation in Ukraine.
Earlier, speaking in Washington, German Finance Minister Christian Lindner said that it was necessary to keep pressure on Russia. Anti-Russian sanctions should be maintained "for a few months, maybe for many years, and with some probability, maybe forever," the German minister said
At the same time, Linder emphasized that anti-Russian sanctions are hitting Germany hard. "The danger of stagflation is real," he said referring to Germany's rapidly rising inflation combined with falling economic growth. "Many Germans could become impoverished," Bloomberg quoted the German minister as saying