This situation is worrying enough on its own, but with all the recent chaos, the nation seems to have overlooked another issue as pressing as immigration or the weakening of the trans-Atlantic alliance: the economy is stumbling and stagnant. Germany has been stuck in a recession for two years, trapped in a cycle of poor growth and low productivity, leaving many at a loss about the next steps. Regardless of the outcome this Sunday, the country’s in serious trouble.
To be fair, there’s consensus on at least one thing: the danger of long-term decline is quite real. Businesses are weighed down by high energy costs, mountains of red tape, and growing competition from China. An aging population means fewer skilled workers are available for key roles. Years of neglecting infrastructure are beginning to show their effects. In a potential global trade war, Germany’s export-reliant economy could face bigger hits than others. When a panel of economists and journalists was tasked with naming the “business word of the year” for 2024, they tossed around contenders like “bureaucracy monster” and “transformation backlog.” Eventually, they landed on “deindustrialization.”
No matter what you call it, it’s clear that something’s got to change. Mr. Merz, who’s in a strong position to become the next chancellor, pitches himself as a reformer with promises of sweeping tax cuts. However, he hasn’t clearly outlined how he plans to fund these cuts. He talks about spurring innovation and growth but offers few details on cutting government subsidies and social services. In an interview with the weekly Die Zeit, Mr. Merz admitted there are limits to what he’s prepared to do. “An aging society that’s enjoyed years of peace and prosperity,” he remarked, “is less inclined to embrace change compared to one in transition.”
The Social Democrats, headed by Chancellor Olaf Scholz, are even more divided. They advocate for easing the constitutional debt brake—which strictly limits government borrowing—to boost spending on education, housing, and infrastructure. Yet the party, with deep roots in the labor movement, remains tied to the country’s mass manufacturing tradition, linked with high employment and social stability. Like the Greens, the Social Democrats are banking on low-carbon technologies to trigger an industrial renaissance. Due to climate protection, Mr. Scholz has confidently stated, the economy could “experience growth rates similar to those of the 1950s and ’60s.”
These references aren’t made by chance. Both Mr. Scholz and Mr. Merz often evoke the Wirtschaftswunder, or economic miracle, of the postwar years, hinting that another might be just around the corner. Deep down, they must realize that the 25-year boom—when everyone shared in the rising tide—was a historical fluke. Yet, trying to comfort voters with the promise of gain without pain, they continue the pretense.
