A look at Germany shows the UK’s growth problem is not a Brexit phenomenon

We English are notoriously bad at languages. But, like magpies, rather than bothering to make the effort, we steal words from others. That is why there is no word in our language for “Schadenfreude”, taking pleasure in the misfortunes of others.

And all but the most diehard of Remainers, eyes firmly closed to the evidence, must surely experience a frisson of this emotion when contemplating the current situation in Germany.

Rishi Sunak’s government is unpopular here. But at least the Conservatives remain comfortably in second place in the polls, unlike Olaf Scholz’s government in Germany. No fewer than 82 per cent of voters are unhappy with his government. His party, the SPD, is behind not just the traditional centre-right opposition, the CDU/CSU, in the polls. It trails the populist AfD, Alternative fur Deutschland.

One reason for this is the collapse of manufacturing output. This is a more substantial slice of the German economy than it is of ours. Think, for example, of the giant car companies which are based there. So the political consequences of problems in this sector are also bigger than in the UK.

Since the Brexit referendum in the second quarter of 2016, manufacturing output in the UK has grown just eight per cent. But in Germany, which is often eulogised on these shores for its manufacturing prowess, it is six per cent lower than in 2016. Imagine if the roles had been reversed! Remainers would be crowing from dawn until dusk.

In Britain last year we endured waves of strikes in the public or quasi-public sector such as the railways. Some of these still linger on, as with the junior doctors’ dispute. The medical profession in Germany is also up in arms, with the potential closure of doctors’ surgeries unless demands are met. Railway unions have already been on strike, with further action expected from the train drivers’ unions.

But German discontent goes much further. The haulage industry is enraged by recent increases in tolls on heavy lorries. Blockages in regional centres are planned, which will culminate on 18 and 19 January in a rally in Berlin which will basically seize up the roads of the city.

Militant farmers are something we usually associate with France, but the Germans are getting in on the act in a big way. Last week, they prevented a ferry carrying the economy minister Robert Habeck from disembarking. He had been on holiday on an island in North Germany and just had to go back. Also planned is an eight day blockade of the country’s motorway network.

Like the others, this protest is also about money, about the standard of living. Farmers are fuming about recent cuts to diesel subsidies and farming vehicle tax breaks.

The German government cannot even attempt a Liz Truss-style increase in borrowing to pay for the costs which would solve the strikes. A legal ruling last November by the country’s constitutional court has created a €60bn gap in government finances.

Tempting though it is, it would be a mistake to take too much pleasure from the problems which Germany is experiencing. The discontent which we see has not just sprung up out of the blue. Not just Germany but Western Europe as a whole has now experienced well over a decade of low economic growth.

As a result, living standards for most people have not increased perceptibly. To fund the increasing demand for public services, taxes have had to rise. On top of everything, the energy price surge of 2022 has squeezed living standards for most.

It is a common theme across Western Europe. Restoring growth must be the top priority of all serious politicians.

As published in City AM Wednesday 10th January 2024
Image: Flickr
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