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14 Feb, 2024 11:44

German FM admits economy ‘unfit’

Christian Lindner believes that structural reforms are needed to strengthen the competitiveness of the EU’s economic heavyweight
German FM admits economy ‘unfit’

Germany needs structural reforms to boost its competitiveness, Finance Minister Christian Lindner said at an event at the London School of Economics on Monday, as cited by Reuters. 

The comments came in response to Germany once again being given the label of “the sick man of Europe” after it turned in the weakest performance among large economies in the world last year, according to the IMF. The German economy contracted by 0.3% year-on-year in 2023, as soaring energy costs, lackluster global orders, and elevated interest rates bit into growth.

Linder, however, denied the comparison, remarking that “some say Germany is the sick man of Europe, I don’t think so,” Lindner.  “We are an unfit man.” The “sick man” label was famously applied to Germany by The Economist in 1999 as the country grappled with the challenges of reunification and reduced export demand. 

The IMF projects the German economy growing by only 0.9% in 2024, well below the 1.4% expected for advanced economies.

Germany is “healthy, but not in the best shape,” Lindner said. Comparing the German and UK economies, he added that “both are in a downturn.” Last month, the minister, sticking with the same metaphor, compared Germany to a “tired man” in need of a cup of coffee of structural reforms.

Linder also discussed how, in his view, the EU needs a single capital market for private investment, instead of endless subsidizing.

“It is unlikely that any economy is capable of paying subsidies for a very long time,” he said.

In a separate comment made to Bloomberg, the minister stated that Germany’s economy would be ruined if it followed the UK out of the EU, adding that the single market is of the “utmost importance” to Germany. 

Last month, Alice Weidel, the co-leader of the far-right Alternative for Germany (AfD) party, called Brexit a “model for Germany.” She has proposed holding a referendum to “let the people decide, just as Britain did.”

“It would ruin our economy,” Linder said commenting on the proposal. “This is why we have to tell people, OK, you maybe are not in line with government policies but this is no reason for changing the complete system and for changing what our wealth is based on.”

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