Germany’s Economic Challenges

By Maria Martinez

LUXEMBOURG (Reuters) – Germany’s economic model is not broken, but the country has lost competitiveness over the past decade, stated German Finance Minister Christian Lindner on Monday.

“We can’t be satisfied with the economic developments in Germany,” he told journalists ahead of a Eurogroup meeting.

The German economy is expected to contract by 0.2% in 2024, an economy ministry spokesperson said on Monday, revising down from a previous projection of 0.3% growth this year.

If this forecast holds, it would mark the second consecutive year of contraction for Germany’s economy, which experienced the weakest performance among large euro zone peers last year, with a 0.3% decline in gross domestic product.

Lindner mentioned that the government is introducing supply-side measures to attempt to return the economy to growth, emphasizing, “After these reforms, Germany will have more competitiveness again.” He added that this growth initiative is just the first step toward an economic turnaround, stating, “but we have to build on it.”

Ambition Needed

Lindner asserted that “ambition” is crucial to maintain EU public finances in order or to restore them where necessary. “I can only encourage everyone to implement structural reforms and to make unpopular decisions,” he stated, noting that what appears unpopular now is the willingness to take responsibility for future generations and the stability of the European Union as a whole.

While Lindner refrained from commenting on French budget plans due to a lack of communication with French colleagues, he emphasized the importance of maintaining credibility in public finances.

“We must credibly reduce our deficits and our debt so that we can continue to finance ourselves well and in a stable manner,” he concluded.