The German economy is now “excruciatingly vulnerable” due to its previous reliance on China, Russia and the US, an expert has warned.
Chancellor Olaf Scholz is under increasing pressure to turn the economy around after a long period of stagnation.
His government was also hamstrung last year when Germany’s constitutional court ruled that €60billion (£52billion) that had been set aside for pandemic recovery spending could not be spent on climate policies instead.
Train strikes, farmer protests and the rise of the far-right AfD party have added to the sense of crisis in Germany in recent weeks.
The International Monetary Fund (IMF) has also predicted that Germany will be the slowest-growing major economy in 2024 at 0.5 percent.
READ MORE: European Union in trouble as France and Germany’s growth forecasts plummet
The IMF has forecasted Britain’s economy to grow by 0.6 percent.
Constanze Stelzenmuller, director of the Center on the United States and Europe at the Brookings Institution, made a stark warning for Germany’s economy.
As quoted by CNN, she said: “It outsourced its security to the US, its export-led growth to China, and its energy needs to Russia.
“It is now finding itself excruciatingly vulnerable in an early 21st century characterized by great power competition and an increasing weaponisation of interdependence by allies and adversaries alike.”
Prior to the war in Ukraine, Germany bought much of its gas from Russia.
But Vladimir Putin’s war put pressure on Berlin to ditch Russia and source its gas from elsewhere, sparking an energy crisis in the country that has also had repercussions across Europe.
China is also a big market for Germany, but the country’s own economic woes has led to a drop in demand for German products such as its cars.
Carsten Brzeski, global head of macroeconomics at Dutch bank ING told CNN: “China has also become a rival. It is now able to produce similar goods that it normally imported from Europe.”
Peter Bofinger, professor of economics at Würzburg University, also gave a worrying outlook for the German economy in a recent article for Social Europe.
He did, however, highlight ways in which Germany can start to recover.
He said: “Germany has become sick. But it could be cured if it were willing to change its lifestyle and take the medicine needed to regain its health.
“The medicine is public debt deployed as an engine of growth – not by reducing taxes and accompanying transfers but by increasing public investment to stimulate domestic demand and the emergence and deployment of new technologies.”
