Germany launches plan to confront recession

Germany is facing a severe recession with an immediate action plan. However, analysts see little chance of a quick recovery.

It is important to highlight that it is the only country on the continent to have faced this situation for two years. In fact, according to reports, last year “more companies closed than in any other year since 2011, during the great financial and economic crisis. The hardest hit sectors continue to be those with high energy consumption, due to high electricity prices.”

This reality is also affected by a shortage of workers and qualified personnel, an aging society, high costs as a result of excessive bureaucracy, among other factors.

The new German government’s promise to improve the situation quickly and sustainably does not seem feasible. In its spring report, the “Council of Economic Experts” speaks of a phase of marked weakness and virtually rules out a short-term recovery.

The council’s five economists predict stagnation for the remainder of this year, with growth at zero. “In 2026, the economy could recover slightly with 1 % growth. But from the experts’ point of view, it is by no means guaranteed that Germany will return, in the medium or long term, to the path of economic success.”

The councilors believe the old German economic model must give way to a more realistic one, in line with current and future challenges. According to Monika Schnitzer, chairwoman of the Council of Experts, it is necessary to promote the transition to new business models and professions, as well as increased production and the implementation of digitalization to reduce bureaucracy.

At the same time, and to address Donald Trump’s tariffs, Economy Minister Katherina Reiche announced measures to be implemented by mid-July, such as “the reduction of the electricity tax and initial reforms to the labor market,” according to the policy of the conservative Christian Democratic Union (CDU) at an economic forum.

M.Pino

Source: DW

(Reference image source: Jakub Żerdzicki en Unsplash)

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