Bertrand Benoit
Appearances
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Europe's largest economy stands at a turning point.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
So the economy has shrunk for the past two years. And these two years of recession in a row, it's not really something that German voters have any experience of. It's not something that they've lived through in the past. And the economy has been gaining in significance for voters for the past year. It's really been the dominant topic.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
So the thinking among most economists is that there are some real structural challenges that the country is facing. Germany is used to selling its goods to the entire world. But the entire world is not as interested in buying Germany's goods as it used to be.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
In everything. It really is across the board. It's corporate investment. It's research and development. It's investment in factories and so on. But it's also state investment. It's also infrastructure investment. Infrastructure is very decrepit in Germany. Transport infrastructure. The trains famously no longer run on time. The power grid is outdated.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
It's struggling to transport power from A to B. you know, from where it's produced to where it's consumed. The education system is not performing. The government is largely analog and needs to be digitized. It's very inefficient. So a lot of this, there's a lot of catching up to do.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
So she wants a smaller state, lower taxes, deregulation. She wants lower costs for companies. But she has also other ideas that are more controversial and that are more unique to the FDA. She wants Germany to leave the EU, the European Union, and give it the euro, return to its own currency.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
He is thinking, if you want to sum it up, it's that the German economic model is not entirely broken and doesn't need to be reinvented from scratch. It can be fixed through making it more competitive in decreasing the costs that are piling on business, decreasing taxes, red tape and so on.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
So the main challenge, the way I see it, is that you need to do two things that are a little bit in conflict with one another. On the one hand, most economists think you need to apply some of the recipes that Merz is calling for. You need to remove some of the shackles on business. And for that, you need to make the state smaller. The state needs to retreat in terms of taxes.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
At the same time, and that's the contradiction, you need probably to make the state also bigger. And the reason is because there is a lack of investment in Germany. And if Germany is going to generate more of its growth internally... that is not just through exports. Right. It will need to spend more of its money at home.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
And that's something that's going to be very difficult for the parties that will be in the next government or that are likely to be in the next government to agree on.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
So there's something tragic to the situation of Germany because it is a country that has been selling its products around the world that is quite unique in that way. If in the future, Germany has to rely more on its own growth, on consumption and investment at home, many of these businesses think that the market is just going to be too small for them to survive, you know.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
There is some concern here that at the end of the day, even if Germany has a more balanced economic model, relies a little bit less on exports and a little bit less on manufacturing, a bit more on consumption and services and domestic growth, it's just not going to be as wealthy as it has been so far.
The Journal.
Germany's Economy Is Broken. There's No Plan B.
Well, it could mean a loss of economic might and influence for Europe. If Germany is not doing well, you know, German companies have manufacturing all across the EU, not just in Germany. And if jobs start getting lost, that's also going to affect neighboring countries. So what's bad for Germany is not going to be good for Europe.