Germany’s Mittelstand of medium-sized family owned businesses, many of them heavily geared to the internal combustion engine – again once considered one of Germany’s key economic strengths – is in danger of being left high and dry.
To cap it all, Germany has found itself badly caught out by its heavy reliance on previously cheap Russian energy supplies.
With war in Ukraine, these have all but disappeared. It almost beggars belief that in the midst of such a crisis, Berlin should further shoot itself in the foot by closing its remaining nuclear power stations.
Relative strength in the public finances theoretically offers Germany a lifeline. Where Reeves finds herself condemned to “tough decisions” over tax and spend, Germany has all the fiscal room it needs to supercharge its economy with stimulus.
But Berlin also finds itself hemmed in by its own self-imposed debt brake rules, and in any case it’s not clear that Keynesian style stimulus works in a country which is structurally a world apart from Britain and also has a very different economic tradition.
Tax cuts tend to be saved rather than consumed, and there is already an unspent €80bn (£68bn) backlog of infrastructure projects held up in the works by byzantine logistical and planning constraints.
Germany’s problems are as much down to deficiencies in supply as demand.
Wander around any of Germany’s major cities, or stroll through its rolling countryside and picture postcard villages, and you wouldn’t believe that this is a country living on borrowed time.
Yet beneath the apparent prosperity lies a sea of trouble where millions are locked in part-time work by generous welfare entitlements that give little incentive to seek full-time employment, and where seemingly every problem is met with a “so ist das Leben” (that’s life) shrug of the shoulders.
Reeves would no doubt gladly swap her own challenges for those of her German counterpart, Christian Lindner, but economic stagnation is not a happy place to be, even when sugared by Germany-style work/life balance.
Germany will eventually bounce back – it always does. But there is a rude, and politically destabilising, awakening to go through before it does.
At least in Britain, we are already fully aware of the mediocrity of our circumstances. Germany still has that moment of self-realisation to come.
