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For some months now the German economy has been one of the EU's many elephants in the room.
And the EU did what it does best with elephants, it ignored it.
Yet over the past several months, the problems kept piling up, and that elephant kept getting bigger.
The coalition government nearly collapsed when Green Economy Minister Habeck's plans to force all German households to install a heatpump (at a cost of €13k per pump!) was leaked. The German economy slipped into official recession as it had two consecutive quarters of shrinking. Mass capital flight was also reported. The cost-of-living crisis forced German unions to call nationwide transport strikes as energy bills and inflation skyrocketed.
Each of these was handwaved in turn by those in Brussels, and in Berlin, as being mere hiccups. Afterall, Germany was emerging from the lockdowns AND was being hit by the war in Ukraine.
Yet two weeks ago the German elephant trumpeted, when a ruling from the German supreme court at Karlsruhe blew a hole of €60 billion into the national budget. Now Berlin's tense coalition goverment stares down the barrel of gun named austerity.
But why is this Brussels' problem? Because another unspoken truth is that Germany is the economic engine of the EU.
Germany's net contribution is €25 billion, more than twice that of France. It's hard to be believe that the frugal northern nations will pick the slack should that sum take a hit.
If Germany cannot pay its own way this year, then the rest of Europe is in deep, deep trouble...
Tadhg Pidgeon |
Ralph Schoellhammer
