Recession in Germany: How long-term complications and misguided economic policy are weighing on the German economy - a look from an expert perspective.

Recession in Germany: How long-term complications and misguided economic policy are weighing on the German economy - a look from an expert perspective.

According to a report from Jungefreiheit.de, Germany is now officially in recession. Gross domestic product (GDP) fell by 0.5 percent in the fourth quarter of 2022 and by a further 0.3 percent in the first quarter of 2023. This economic growth makes Germany at the bottom of the list in the Eurozone. The government's optimism that Germany would not fall into a recession has proven wrong. Deutsche Bank even predicts that the economy will shrink by 0.3 percent throughout 2023.

The current recession could either be a one-off blip or a harbinger of a long-term storm for the German economy. Unfortunately, there are many indications of the latter. The disastrous monetary policy of the European Central Bank (ECB) is a main cause of current inflation. The German federal government is not directly responsible for this monetary policy, but it shares responsibility for the wrong path in economic policy. Climate and energy policy in particular neglects security of supply and economic efficiency in favor of climate protection.

These undesirable developments in politics lead to young, well-trained specialists emigrating and companies reacting by relocating production and emigrating. Deindustrialization, which has been underway for years, is accelerating, particularly in energy-intensive industries. In addition, Germany is transforming from a social market economy to a state-controlled pseudo-market economy. Market principles and competition no longer play a role; instead, dirigiste mechanisms and regulatory requirements are used.

In order to calm the population and companies, the state is increasing social spending and paying billions in subsidies. In addition, it subsidizes the price of industrial electricity and thus makes households and companies dependent on themselves. As a result, not only is economic freedom lost, but the concept of a market economy is also perverted.

The green-red economic policy of recent years is leading to progressive deindustrialization and destroying the market economy foundation on which Germany's prosperity and leading role are based. The current recession is a sign of a fundamental and home-grown weakness in growth.

Short-term economic stimulus measures are not a solution, they only cause more problems. Only a reversal of the wrong economic policy path and a return to the principles of the social market economy can provide relief. Unfortunately, the current traffic light government is neither able nor willing to implement this.

Source: According to a report from Jungefreiheit.de