Germany’s economic malaise has resurfaced in stark terms, with leading economist Daniel Stelter reviving the unflattering comparison of the nation as “the sick man of Europe”. In an interview with the “Rheinische Post” Stelter conceded that while not the sole afflicted nation within the European Union, Germany’s persistent economic weakness demands urgent and critical reassessment of current policies.
Stelter’s prognosis paints a grim picture, dismissing expectations of a sustained economic recovery in the coming years. He argues that even substantial investments initiated by the government are unlikely to avert a temporary “firework display” followed by a return to the current stagnant conditions – only exacerbated by mounting debt and subsequently higher interest rates. This scenario, he warns, would completely eliminate any remaining fiscal space for future public investment.
The economist forecasts a “barely noticeable” growth trajectory for the German economy in the medium term, questioning the optimistic growth estimates currently projected by the government’s Council of Economic Experts. Stelter believes even the Council’s projection of a 0.5% annual growth is overly ambitious, highlighting a fundamental disconnect between official forecasts and the realities facing German businesses.
His prescription involves a radical overhaul of Germany’s regulatory landscape, advocating for a significant reduction in bureaucratic red tape. Stelter proposes an aggressive agenda of deregulation, calling for the repeal of 25% of existing legislation within the next four years. Such a sweeping measure, he contends, is necessary to unlock potential growth and restore competitiveness at a time when Germany’s economic vulnerability is drawing renewed scrutiny. The critique underscores a growing perception that the government’s current course lacks the transformative action needed to address the deepening economic challenges.