EU’s biggest cash cow is in trouble, according to latest estimates

No.1 EU economy “is in poor health,” say Germany’s 5 financial institutes

Montage © Facts4EU.Org 2024

Facts4EU.Org reviews the latest forecast from the German Joint Economic Forecast group

On Wednesday (27 Mar 2024) the news out of Germany was not good. Their Joint Economic Forecast project group presented its updated analysis of of the German economy, which it prepared on behalf of the Federal Ministry for ‘Economic Affairs and Climate Protection’.

Germany accounts for approximately 30% of the total GDP of all the 27 EU member countries. In simple terms, if its economy sneezes the others catch the ‘flu.

This matters for the EU as a whole

Germany is by far the largest funder of the EU budget. When the United Kingdom was still a member, Germany and the UK were the principal transferors of wealth to the many smaller EU countries. With the UK now gone, a much greater responsibility has fallen to Germany.

The state of the German economy therefore matters greatly. With it turning down, the EU as a whole has a reason to worry.

Brexit Facts4EU.Org Summary

Germany's doldrums

1. Germany’s GDP (with new forecast for 2024)

2021 : 3.2%
2022 : 1.8%
2023 : -0.3%
2024 : 0.1%

Brexit Britain’s GDP growth rate in 2023 was 0.1% compared to Germany's loss of -0.3%.

[Source : Gemeinschaftsdiagnose and UK ONS]

The official forecasts from Germany have now cut its economic growth forecast for this year by more than 90%. Brexit Britain’s performance has exceeded this.

When it comes to unemployment the situation is no better.

Brexit Facts4EU.Org Summary

Germany's doldrums

2. Germany’s unemployment (with new forecast for 2024)

2021 : 5.7%
2022 : 5.3%
2023 : 5.7%
2024 : 5.8%

Brexit Britain’s unemployment rate is currently only 3.8%.

[Source : Gemeinschaftsdiagnose and UK ONS]

About the “Gemeinschaftsdiagnose” group – the Joint Economic Forecast group

This is an independent group of five of Germany's economic institutes commissioned by the German Ministry for ‘Economic Affairs and Climate Action’ to produce economic forecasts every half year, in spring and autumn.

The five institutes are

The German Institute for Economic Research
The ifo Institute for Economic Research
The Kiel Institute for the World Economy
The Halle Institute for Economic Research
RWI Leibniz Institute for Economic Research

According to their report issued on Wednesday, German economic activity is currently running barely above pre-pandemic level. Productivity in Germany is treading water. Whether for exports or the domestic economy, there have been more headwinds than tailwinds.

Private consumption has picked up later and less strongly than they previously expected. Despite growing global economic activity, German exports have fallen, in particular because demand for the capital and intermediate goods so important for Germany has been weak and price competitiveness for energy-intensive goods has suffered.

Continuing uncertainty over economic policy continues to weigh on corporate investment, which is likely to be at around its 2017 level.

German Chambers of Commerce of Industry

The German Chambers of Commerce of Industry highlighted the need for urgent action in the face of this forecast of nigh-on zero growth for 2024.

The CEO of the German Chambers of Commerce and Industry, Martin Wansleben, had this to say about the forecasts:

“Business sentiment is still poor. And there are reasons for that: Energy costs are still significantly higher than in other industrial countries. Add to that, a big bureaucracy burden, worsening skills shortages and geopolitical uncertainties, which are weighing on exports.”

Mr. Wansleben stressed that businesses need a clear positive signal.

“The conditions for doing business in Germany urgently need to be improved. That is the only way that the private investment that is needed can be stimulated.”

Observations

The reason we publish information like this is because the BBC won’t. They prefer to publish anything negative about the UK that they can find. This does the country no service at all.

We are not suggesting that the BBC should act as a propaganda service for the UK, in the way the EU Commission does for its empire. We are merely suggesting that they they present a balanced output and give their audience a sense of perspective within Europe and within the world as a whole.

We must get reports like this out there

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[ Sources: Gemeinschaftsdiagnose group | UK's ONS ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Sat 30 Mar 2024

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Reader Comments 5

1. Captain Thunderbolt , Saturday, March 30, 2024, 06:54:

Not good for any country to be in that position, hope things pick up for them

2. LuxuryBalloon , Saturday, March 30, 2024, 10:02:

The combination of Putin turning off the gas taps and a Labour-like party in government was always going to result in the German economy falling off a cliff and its GDP shrinking by more than 10%.

3. NH , Saturday, March 30, 2024, 13:11:

German Energy Prices have declined hugely since their peak in 2022 and they have come down 50% in the last year. They are still higher than in 2019 but not by a huge amount and they now have lower spot prices than many other EU countries. This will effect some energy intensive sectors but I would expect other factors to have a bigger effect on the overall economic growth in 2024. Energy prices were always going to increase because they had committed to an energy green transition but it seems to have been managed extremely badly.
.
Germany has benefited hugely from the Euro currency. It's has kept their currency hugely undervalued when you take into account the fundamental economic data. It's estimated that this has added approximately 1.2 Trillion Euros to their economy. The problem is this situation is benefitting Germany but it a huge hinderance to other Euro economies.
.
This is now becoming a huge problem for Germany because other Euro economies are showing no desire for adopting fiscal discipline and Germany's has no option but to support the Euro which has been costly and could become even more costly. This is happening at a time when key competitor nations are becoming strong competitors in German's main industries.

4. terence patrick hewett , Saturday, March 30, 2024, 17:20:

First the Economist; now the Financial Times:
....
"UK politicians need to get over Brexit and prioritise trade, say businesses."
......
The rejoiniac tendency is shrinking into a small rump of loony obsessives.

5. KB , Sunday, March 31, 2024, 14:23:

Terence P H (4) the problem is, it's that small rump of rejoiniacs that is running everything.
All the signs are that the next Labour government will not do anything to pursue Brexit opportunities.
Can you really imagine them enthusiastically negotiating trade deals around the world ?
You would hope the current government would be hurrying through the CPTPP accession so it is irreversible by the time of the next general election. But I bet they don't.

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