Ho n, Gus a A.
A icle
Elec ions in Ge many: Economic Policy a a C oss oads
In e economics
Sugges ed Ci a ion: Ho n, Gus a A. (2024) : Elec ions in Ge many: Economic Policy a a C oss oads,
In e economics, ISSN 1613-964X, Sciendo, Wa saw, Vol. 59, Iss. 6, pp. 310-311,
h ps://doi.o g/10.2478/ie-2024-0060
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In e economics 2024 | 6
310
Edi o ial
In e economics, 2024, 59(6), 310-311
JEL: E31, H63, H54
DOI: 10.2478/ie-2024-0060
Elec ions in Ge many: Economic
Policy a a C oss oads
The economic si ua ion in Ge many is p eca ious. Simila o he beginning o his cen u y,
Ge many has slipped in o a long- e m phase o s agna ion. G ow h igu es ha e luc ua ed
close o ze o since he end o he co ona i us pandemic. This is in sha p con as o mos
o he majo economies, which ha e been able o eco e mo e o less om he impac o
he pandemic in ecen yea s. Ge many is he e o e alling behind. The image o Ge many
as he “sick man o Eu ope” is back in ashion.
So wha is going on wi h he Ge man economy? Wha economic policy measu es a e poli i-
cal pa ies p omising in he upcoming elec ion campaign o o e come he s ubbo n eco-
nomic weakness in wha is s ill he s onges Eu opean economy?
The main weakness o he Ge man economy is lack o in es men . This applies mo e o
less o all sec o s. Public in es men , pa icula ly a he local le el, has been comple ely
inadequa e o yea s in ela ion o equi emen s. The lack o in es men has led o a g adual
de e io a ion o in as uc u e, which is now aking ull e ec . A he le el o he ede al
s a es, in es men in he educa ion sys em and social housing, which has also been lack-
ing o yea s, has led o no iceable de iciencies in he quali y o educa ion and in some
cases o massi e en inc eases, which a e pu ing a hea y s ain on he pu chasing powe
o p i a e households. Al hough he ede al go e nmen has no iceably inc eased i s in-
es men ac i i y, his is s ill nowhe e nea enough o compensa e o he de ici s o he
pas , le alone o mee clima e policy equi emen s.
The same can be said o p i a e in es men , which has been signi ican ly sh inking e-
cen ly. This weakness is pu ing p essu e on he model o an economy ha is s ongly
gea ed owa ds indus y and i s expo s. Geopoli ical con lic s and he Chinese s a egy o
looding he expo ma ke s wi h i s cheape indus ial p oduc s in o de o compensa e o
i s own domes ic economic weakness a e playing a signi ican ole. This is compounded
by unce ain y abou he u u e, he po en ially con lic -laden o eign ade s a egy o he
USA, and he lack o cla i y abou he necessa y con e sions due o clima e policy equi e-
men s. Howe e , unce ain y and ambigui y a e poison o indus ial in es men .
Despi e all hese nega i e ends, he e is a undamen al di e ence be ween he s agna ion
a he beginning o he cen u y and he cu en s a e o he economy. While o e i e million
people we e unemployed back hen, he cu en igu e is “only” abou 2.5 million. In his
espec , he labou ma ke si ua ion is much be e .
Agains his gene ally a he gloomy backd op, he dispu e o e economic policy concep s
o o e come he mise able economic condi ion will be a ocal poin o he elec ion cam-
paign be ween he pa ies. Th ee o e lapping a eas o con lic a e cu en ly eme ging be-
ween he es ablished pa ies SPD, CDU, G eens and FDP: iscal policy, clima e policy and
social policy.
The cu en go e nmen b oke up o e iscal policy. While he FDP and, om he opposi-
ion benches, he CDU insis ed on s ic adhe ence o he deb b ake, he SPD and he
© The Au ho (s) 2024. Open Access: This a icle is dis ibu ed unde he e ms o he C ea i e Commons A ibu-
ion 4.0 In e na ional License (h ps://c ea i ecommons.o g/licenses/by/4.0/).
Open Access unding p o ided by ZBW – Leibniz In o ma ion Cen e o Economics.
ZBW – Leibniz In o ma ion Cen e o Economics 311
Edi o ial
Gus a A. Ho n, The Uni-
e si y o Duisbu g-Essen,
Ge many.
G eens wan o elax i o in es men s and possibly also o mili a y aid o Uk aine. The
in es men s a e p ima ily in ended o mode nise he dilapida ed in as uc u e and mee
he equi emen s o clima e change. This necessi y is dispu ed by he o he pa ies, a leas
wi h ega d o clima e change, and sheds ligh on a undamen al dispu e o e he s a egic
di ec ion o clima e policy. On one side a e he CDU and FDP, who essen ially see he ma -
ke as he d i e o he necessa y in es men s. In hei iew, he p e equisi es o his ha e
been c ea ed wi h he in oduc ion o le ies on CO2 emissions, which make he use o ha m-
ul echnologies mo e and mo e expensi e. This expec ed inc ease in he ela i e p ices o
emission-p one goods would au oma ically and e icien ly igge p i a e in es men , which
o e ime would b ing abou he ansi ion o a sus ainable p oduc ion economy. Fu he
public in es men o an ac i e indus ial policy would be la gely supe luous wi h his ap-
p oach. These unds could he e o e be sa ed and highe public deb can be a oided.
The SPD and, o a lesse ex en , he G eens a e pu suing a di e en s a egy. They wan
o add an ac i e in es men and indus ial policy o p ice signals. In his way, he speed o
he ansi ion is expec ed o inc ease. This should no only imp o e he ca bon oo p in
mo e quickly bu also c ea e echnological ad an ages, pa icula ly in indus y. In his way,
he cu en expo model o he Ge man economy could endu e in a enewed o m. This is
also a majo depa u e om he p oposal o he o he wo pa ies, whe e he ma ke alone
decides whe he he cu en economic model will endu e. The hope is ha his will esul
in a sus ainable ansi ion wi hou misalloca ion. The ea is ha his could be associa ed
wi h a signi ican inc ease in s uc u al unemploymen o a loss o quali y in he newly c e-
a ed jobs.
A u he con lic exis s p ima ily be ween he SPD and he o he pa ies o e he app op i-
a e social policy in he en i onmen desc ibed. Fo many, he p e ailing idea is ha a choice
mus be made be ween mo e in es men and exis ing social bene i s. Acco dingly, he e
a e calls o cu o a leas eeze social bene i s. The SPD wan s bo h mo e in es men and
inc eased social secu i y du ing he ansi ion p ocess. This is only consis en i he deb
b ake is opened up o in es men a he same ime, which is in ac one o hei demands.
In Ge many, as in o he coun ies, i is no uncommon ha con o e sial discou ses be-
ween he es ablished pa ies a e o e shadowed by deba e wi h populis pa ies, espe-
cially igh -wing populis pa ies. They delibe a ely pick-up on weaknesses in he economic
si ua ion and blame hem on mig an s, suppo o Uk aine, ac ual o supposed eli es and
he es ablished pa ies as a whole. This is how hey ea he opics o high en s and dilapi-
da ed in as uc u e in he public discou se.
Abo e all, igh -wing populis pa ies ha e seized on one issue ha he o he pa ies ha e
so a only add essed inadequa ely: in la ion, o mo e speci ically, highe p ices. E en
hough he in la iona y momen um has la gely come o a s ands ill, p ices emain a a sig-
ni ican ly highe le el. This is pa icula ly he case o ood p ices, which in Ge many a e
o e 30% abo e he 2021 le el. Middle- and lowe -income amilies a e pa icula ly a ec ed.
Thei pu chasing powe has been no iceably educed by he p ice inc ease. This has no
been o se by he compensa o y measu es aken by he ede al go e nmen o his g oup.
While he bu den o highe ood p ices was o g ea e impo ance o amilies wi h low
incomes, he ax elie has li le e ec on hem, as hey pay li le i any axes. I hey a e
employed on a p eca ious basis, i.e. wi hou collec i e wage ag eemen s, hey gene ally do
no bene i om he ax- ee in la ion compensa ion ag eed upon by he collec i e ba gain-
ing pa ies in many sec o s.
This means ha b oad sec ions o he popula ion a e ac ually wo se o han hey we e
h ee yea s ago. I emains o be seen which line o a gumen s will p e ail wi h o e s in
Feb ua y.
