Bristol Hannover Council

** On February 25, financial journalist Wolfgang Munchau talked to the members of the British German Association about his recent book ‘Kaput!’ on the decline of the German economy.  

Wolfgang mostly avoided re-telling the now familiar critique of Germany in the Merkel era: overdependence on Russian oil and gas, too focused on boosting exports of machinery to China, insufficient investment in critical infrastructure .

He timed the most recent decline from 2018. Although Covid masked the effects, stagnation is now incontrovertible. In a world which has rapidly embraced digital Germany has remained too analogue. Industry, particularly large manufacturing companies are in a closed network with government politicians and banks. This together with over-regulation stifles innovation and discourages successful start-ups.

There is a widespread recognition that this is the case, but he sees little will amongst the established parties to change. In areas where Europe was supposedly strong, like environmental technology the markets are now dominated by US and Chinese companies.

In AI Germany is not in a great position as it lacks the cheap energy needed to support large data farms.

As regards future relations with the UK, he sees UK strengths in services and in financial services as being attractive for Germany. This could be the basis for a capital markets union between the 2 countries. On defence, both countries want to increase their military capability but national procurement policies weaken it and preclude savings from economies of scale.

IAN TURNER

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