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Germany is the real sick man of Europe

Auf Weidersehen: the now-shuttered Grohnde nuclear power plant in Saxony. Getty

Forget all the doom and gloom about Britain’s economy, says Wolfgang Münchau in The New Statesman. The real “sick man of Europe” is Germany. The country is trapped in a period of “stagflation” – high inflation and low growth – similar to the UK in the 1970s. Domestic consumption is down; GDP is contracting; it’s the only G7 country currently in recession. This isn’t part of some “classic cyclical pattern”. It’s because Germany has an “analogue-age” economy. It has excellent scientists and engineers, but they’re stuck designing fossil fuel-powered cars and pre-digital kit. This technophobia isn’t new. In 2013, Angela Merkel was still calling the internet “uncharted territory”.

The folly of Germany’s over-reliance on industrial production has been highlighted by recent disruption to the global supply chain, but its real problems are long-term. Petrol and diesel cars will be phased out by 2035, so the big money will soon be in developing batteries and software for electric vehicles – something German makers don’t excel at. Olaf Scholz insists his country can instead become a hub for green manufacturing, but it will still rely on China for the key components and natural resources – meaning those “supply-chain vulnerabilities” will remain. And as other governments pour money into nuclear fusion, Berlin’s “Luddite leaders” are shutting down nuclear plants and so maintaining their troubling dependence on Russian oil. Germany needs a “political reboot” of no lesser scale than the one it went through after World War II. Until that happens, “the trophy for ‘sick man of Europe’ is safe in Berlin”.