Germany, a country long revered for its productivity and economic prowess, is now grappling with a troubling decline, as prominent business leaders and experts voice concerns about the nation’s policy choices over the past two decades.
The silence or complacency of leading top managers, especially in major automotive companies such as VW and Mercedes-Benz, regarding anti-capitalist environmental policies has not gone unnoticed. They previously supported initiatives like the “energy and mobility transitions,” initiated by Angela Merkel, without publicly questioning decisions such as the ban on combustion engines by 2035.
However, a growing number of voices from within the business world are beginning to speak out against the trajectory. Wolfgang Reitzle, a renowned figure in German business circles with experience at BMW, Ford, and Linde, recently penned a strong critique in the German daily Die Welt. He boldly declared, “Germany is in decline”.
Reitzle’s argument is compelling. While Germany has been synonymous with productivity improvements, the rising unit labor costs have been a cause for concern. The country has slipped from the top ten nations in Europe in terms of GDP per capita, and it no longer features in the list of the 20 most competitive countries worldwide.
The current coalition government in Germany, composed of left-wing parties such as the SPD and the Greens, along with the market-oriented FDP, is attempting to avert a worst-case scenario. However, Reitzle doesn’t solely blame this government. He points to the Merkel era, spanning from 2005 to 2021, as a crucial period that failed to implement significant structural reforms. He highlights two particularly impactful decisions during Merkel’s tenure: the energy transition and the opening of borders to uncontrolled migration.
Reitzle accuses Germany of expanding its welfare system extensively while neglecting investments in the country’s future. He finds the state of infrastructure in a “disgraceful” state for a nation as economically prosperous as Germany. Additionally, he criticizes the EU’s propensity to impose new regulations on European companies, citing the example of BASF, which must contend with a staggering 14,000 pages of chemical industry regulations.
The consequences of these policies are becoming evident. BASF recently announced job cuts in Germany while investing billions in China, citing exorbitant electricity costs, red tape, and bureaucracy. Other companies have also revealed plans to shift operations from Germany to the USA or Asia.
Reitzle is concerned about Germany’s increasing divergence from market economics, with the public sector’s share growing to 50 percent. He laments that faith in the market economy is waning, and he points out that Germany already has the world’s shortest annual working hours.
Reitzle believes the fundamental issue lies in Germany’s climate policy, calling it “foolhardy.” He criticizes the country for abandoning nuclear power, leading to energy shortages. Reitzle argues that Germany’s pursuit of an “All Electric – Renewables Only” policy is unrealistic, as it would require a massive increase in electricity generation capacities, particularly from wind and solar power, along with extensive storage and backup solutions.
Reitzle’s criticism extends to key figures like Merkel and Economics Minister Robert Habeck of the Greens. He warns that their pursuit of an ideologically-driven “Renewables Only” plan, combined with left-wing environmentalist sentiment, threatens to result in significant losses of prosperity for Germany.
