Economy falls again, with no signs of improvement — ‘Must be because of Brexit’ …? NO NOT THE UK but Germany
On Tuesday, July 30, 2024, the German statistics agency Destatis released its latest data on the performance of the EU’s top economy, which significantly impacts the success of many other EU countries.
Once again, Destatis has acknowledged that Germany’s economy has declined compared to the same period last year. Germany’s economic output has been falling, and it is also facing challenges across various sectors. Additionally, the CPI inflation has risen to 2.3%, which is higher than the CPI inflation in Brexit Britain (2.0%).
3 reasons you’re better off in Brexit Britain than in Germany
Germany’s difficult position deteriorates
1. Consumer price inflation
- Germany: 2.3% (Up by 0.3%)
- Brexit Britain: 2.0% (Stable)
- Verdict: Germany is worse off than the UK
[ Sources: Destatis Federal Statistics Agency | Office for National Statistics ]
- Germany : -0.1% (Q2 2024)
- Brexit Britain: +0.7% (To Q1 2024)
- Verdict: Germany worse off than the UK
In Q2, the UK’s GDP growth figures will be available on 15 August. In Q1, the UK led the G7 with a 0.7% increase.
3. Production, including manufacturing
- Germany : -6.7% (year-on-year)
- Brexit Britain: +0.4% (year-on-year)
- Verdict: Germany worse off than the UK
The negative developments from Germany and the EU persist, especially when compared to Brexit Britain.
Holger knows
The current economic outlook for Germany is negative, with declining investment across various sectors.
“The Federal Statistical Office (Destatis) also reports that there was a decline, in particular, in gross fixed capital formation in machinery and equipment and in construction, after price, seasonal and calendar adjustment.”
- German Federal Statistics Office, 30 Jul 2024
In an upcoming report, I will present the latest critical assessment of the Eurozone, of which Germany is the most significant member, by S&P Global. They are known for publishing highly respected and widely read market reports worldwide.
Is the EU’s top economy now becoming “the Sick Man of Europe”?
The UK, previously labeled as “the Sick Man of Europe,” has experienced a significant economic turnaround, with its economy growing while Germany’s has either stagnated or declined.
Germany is currently grappling with a range of challenges that extend beyond its economic woes. The three-party coalition government, comprising the Socialists (SPD), the Greens, and the conservative Free Democrats (FDP), is contending with escalating internal tensions. The ability of these parties to forge effective governance agreements has long been a significant and demanding undertaking.
In July, a compromise federal budget for the next year was put together. However, Finance Minister Christian Lindner of the minority FDP partner in the coalition has expressed the need to renegotiate this deal, as it is likely to be overruled by Germany’s Constitutional Court. In November 2023, the Federal Constitutional Court ruled that the government was not allowed to reallocate around €60 billion from a fund established to mitigate the fallout of the Covid-19 pandemic and instead use it to subsidize the transition to a green economy. Now Lindner warns that the same situation may occur with plans to re-allocate part of the fund set up to mitigate the effects of rising gas prices.
Germany marches Right
Since the last German Federal General Election, there has been a noticeable shift in the sentiment of the German people towards right-leaning political views. In the recent EU Parliament elections, Chancellor Olaf Scholz’s SPD socialist candidates only received 13.9% of the vote, marking the party’s worst result in a national vote in Germany in over a century. Additionally, voter support for the Greens, the second-largest party in his coalition government, decreased by nearly half. Meanwhile, the right-wing AfD experienced a surge in support, securing second place ahead of the Chancellor’s party.
The UK has a vested interest in Germany’s economic prosperity, as it is a crucial trading partner. According to our report, despite the negative portrayal by anti-Brexit media, Britain can maintain a positive stance post-Brexit. Statistics show that trade between the UK and Germany has remained strong, with an increase of 5% in the past year.
[ Sources: German Federal Statistics Office | UK Office for National Statistics ]
