{"id":279239,"date":"2026-02-03T22:31:10","date_gmt":"2026-02-03T22:31:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/279239\/"},"modified":"2026-02-03T22:31:10","modified_gmt":"2026-02-03T22:31:10","slug":"where-does-germanys-economy-go-from-here-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/279239\/","title":{"rendered":"Where does Germany\u2019s economy go from here? \u2013 The Irish Times"},"content":{"rendered":"

There was an melancholic air as Mercedes Benz<\/a> launched a year-long, worldwide party to celebrate the 140th anniversary of the motor car.<\/p>\n

For many, its birth certificate is patent number DRP 37435, issued on January 29th, 1886, to Carl Benz for a \u201cgas-powered vehicle\u201d.<\/p>\n

The \u201cBenz patent motorcar Model 1\u201d was a brave departure: a unified single-cylinder engine and chassis on three wire-spoke wheels with a top speed of 16km\/h and 0.75 horsepower.<\/p>\n

\u201cI believe in the horse,\u201d was Kaiser Wilhelm\u2019s tepid response. \u201cThe automobile is a passing fad.\u201d<\/p>\n

Some 140 years on \u2013 110 years longer than the kaiser lasted \u2013 German-built cars may be the longest fad in history. <\/p>\n

But for how much longer? As China\u2019s automobile industry pushes aggressively into Europe, many Germans wonder what Mercedes-Benz will have to celebrate for its 150th anniversary. <\/p>\n

And what of the German economy, driven like no other industry by its car giants Mercedes, BMW and Volkswagen?<\/p>\n

That all came just as Germany revised its economic forecast for this year to just 1 per cent, down from 1.3 per cent, citing heightened global trade fears and an acknowledgment that fiscal stimulus measures have yet to make themselves felt.<\/p>\n

With an eye on the Benz anniversary, Germany\u2019s economics minister Katherina Reiche said the country must pivot toward new \u201cgrowth engines\u201d. <\/p>\n

[\u00a0Euro zone economy unexpectedly grows by 0.3% in fourth quarterOpens in new window<\/a>\u00a0]<\/p>\n

Her hope is a two-track approach to investment. One track is multibillion state spending on infrastructure, defence and climate change measures. The other track is to push reforms tailored to attract private investment, which makes up only 16 per cent of Germany\u2019s total.<\/p>\n

Reiche, portrayed by Der Spiegel this week as an incompetent, image-obsessed micro-manager, told journalists on Friday: \u201cHow we secure prosperity, competitiveness and social peace in this new situation, that is the question.\u201d<\/p>\n

Asking questions rather than providing answers \u2013 let alone action \u2013 is a common criticism of the German federal government, at all levels.<\/p>\n

Almost a year on from the election that brought Friedrich Merz<\/a> to power, the chancellor\u2019s economic report card remains mixed-to-negative.<\/p>\n

In business circles, managers are tired of the 70-year-old former Blackrock executive\u2019s repeated diagnoses and lists of what needs to happen, as if he has forgotten was elected to make things happen.<\/p>\n

\"GermanGerman Chancellor Friedrich Merz has faced criticism for his handling of the economy. Photograph: Tobias SCHWARZ \/ AFP via Getty Images <\/p>\n

A typical example was last week\u2019s Merz letter to his coalition\u2019s MPs, promising to prioritise economic reform in 2026, saying: \u201cThe situation in many sectors is very critical.\u201d<\/p>\n

Further eye-rolling followed a recent state visit to India. In speeches there, in Davos and Berlin, Merz has promised to pivot the German economy away from the US \u2013 without any detail, map or timeline.<\/p>\n

[\u00a0\u2018My country pulled world into a black abyss\u2019: Chancellor urges leaders to learn from GermanyOpens in new window<\/a>\u00a0]<\/p>\n

Coalition politicians insist the government is pushing through reforms at a record pace, with plans to cut corporate tax and streamlining the welfare system \u2013 though without cutting payments.<\/p>\n

But after nine months in office, with firms closing daily in every sector, Germany\u2019s business lobby groups say announcing plans is different from actual implementation.<\/p>\n

\u201cOur SME family firms see none of the notable improvements that are urgently needed,\u201d said Marie-Christine Ostermann, president of the Family Firm lobby group, on national radio. \u201cThe reforms to date have not been courageous enough. Germany is no longer competitive.\u201d<\/p>\n

This view is widely-held and features in a recent KMPG report, warning that \u201ca real upturn in Germany is not to be expected without far-reaching reforms\u201d.<\/p>\n

\u201cHigh energy costs, rising social security contributions, lengthy planning and approval procedures, and excessive bureaucracy continue to weigh on the German economy,\u201d the report concluded.<\/p>\n

[\u00a0Childlike, greedy, terrifying \u2014 who inspired the villain in Hamburg Opera\u2019s new production?Opens in new window<\/a>\u00a0]<\/p>\n

A separate OECD study shows one reason why: taxes and social contributions for a single person without dependents in Germany adds up to 47 per cent on top of labour costs, the second-worst in the 38-country OECD list. The organisation flags this as one of many impediments to investment in the country.<\/p>\n

This grim outlook is widespread, judging by the slump in December\u2019s IFO business climate index to 87.6 percentage points, down from 88.0 points the previous month. <\/p>\n

Other indicators tell their own tale, such as a the highest January unemployment in 12 years. Meanwhile the Verdi trade union is ramping up pressure on pay and conditions, with hospital strikes last week followed by a countrywide public transport strike on February 2nd.<\/p>\n

Despite all its difficulties, the KPMG report predicts the German economy will pick up \u201ccautiously\u201d in 2026, noting growth forecasts of up to 1.5 per cent. <\/p>\n

But they are based on the assumption that Germany\u2019s borrowed billions for road and railways makes itself felt.<\/p>\n

The Bundesbank was less cheery in its last monthly report, noting that Germany had been \u201cclearly in recession since the end of 2022\u201d.<\/p>\n

[\u00a0Auschwitz survivor warns German parliament of anti-Semitism \u2018epidemic\u2019Opens in new window<\/a>\u00a0]<\/p>\n

One third of its own forecast of 0.9 per cent growth this year, it noted, was not down to the ruling coalition but the calendar: more public holidays on weekends in 2026, leading to a higher number of working days.<\/p>\n

Leading Bundesbank officials remain sceptical, if diplomatically silent, that the government\u2019s multibillion debt investment will succeed. For one thing, the government is struggling to disburse the billions it has borrowed.<\/p>\n

Though federal investment rose by 17 per cent last year to a record \u20ac87 billion, this was nearly \u20ac29 billion short of Berlin\u2019s own schedule.<\/p>\n

\u201cWe need to do better here,\u201d admitted a sheepish Lars Klingbeil, federal finance minister.<\/p>\n

As Merz\u2019s first year in office looms in May, some onlookers are suggesting Germany\u2019s problems are as much psychological as economic, with too many younger Germans taking decades of prosperity and wealth for granted.<\/p>\n

\u201cYouth discipline is often limited to self-optimisation,\u201d sniped Fatina Keilani, a columnist in Die Welt daily. \u201c6am on the gym treadmill is no problem. But to show up at 6am to work, even with no enthusiasm? Difficult.\u201d<\/p>\n

Some 140 years after sparking one innovation after another, Keilani suggests the modern German state suffers from similar lack of discipline, \u201cconfusing standstill for stability, talking too much about redistribution and too little about accomplishment\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"There was an melancholic air as Mercedes Benz launched a year-long, worldwide party to celebrate the 140th anniversary…\n","protected":false},"author":2,"featured_media":279240,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[27235,72,8864,292,61,60,18039],"class_list":{"0":"post-279239","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-berlin","9":"tag-business","10":"tag-friedrich-merz","11":"tag-germany","12":"tag-ie","13":"tag-ireland","14":"tag-mercedes-benz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/279239","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=279239"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/279239\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/279240"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=279239"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=279239"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=279239"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}