Merkel’s legacy for Germany in the chart

Read Time:6 Minute, 29 Second


In 2011, German Chancellor Angela Merkel visited the chemical engineering laboratory of the Dow Olefinverbund GmbH chemical plant in Schkopau near Merseburg in eastern Germany.

AFP | AFP | Getty Images

It is hard to believe that Germany, the largest and most successful economy in Europe, was called the “Sick Man of Europe” in the late 1990s and early 2000s.

The German economy has grown under the leadership of outgoing Chancellor Angela Merkel, a conservative leader who has led the government for the past 16 years. According to Eurostat data, in 2019, before the outbreak of the Covid-19 pandemic, a quarter (24.7%) of the EU’s entire GDP was created by Germany.

CNBC has produced five charts that look at different parts of the German economy and society during Merkel’s tenure. According to some political experts, this shows that her legacy is not only a kind of prosperity, but also a kind of missed opportunities and mistakes.

GDP

The chart shows that Germany’s export-oriented economy relies heavily on manufacturing, which has grown steadily during Merkel’s administration, far surpassing its competitors in the UK and France.

In 2019, the coking plant of German industrial group ThyssenKrupp on the Rhine in Duisburg, western Germany.

Ina Fassbender | AFP | Getty Images

unemployment

When assessing Merkel’s legacy, Goldman Sachs analysts pointed out that although Merkel has achieved “great success” in reducing unemployment, “most of the decline in structural unemployment may have stemmed from her predecessor (Gerhard Schroeder). Reforms followed by a decade of stagnant real wages.”

On August 30, 2005, Angela Merkel visited a steel plant in Georgsmarienhuette, Germany.

Thomas Immo | Photothek | Getty Images

Analysts pointed out that despite this, the Merkel government “maintained sound public finances and adopted a constitutional debt brake, but it responded strongly during the crisis and successfully protected the labor force through the “Kurzarbeit” plan in 2008 and 2020. market.

Kurzarbeit refers to Germany’s short-term work plan, where employers reduce employees’ working hours instead of firing them in times of crisis (such as the Covid pandemic).

migrant

One area where Germany is very different from France and the United Kingdom is the immigration pattern under Merkel. Perhaps it is in this area that her Prime Minister’s Office has been widely praised and has also caused controversy.

On September 2, 2015, in Idomeni, Greece, Syrian and Iraqi migrants sleep on railway tracks, waiting to be processed across the Macedonian border. Since the beginning of 2015, the number of immigrants using the so-called “Balkan route” has increased dramatically, arriving in Greece from Turkey, passing through Macedonia and Serbia, and then entering the European Union through Hungary. In war-torn countries such as Syria, the number of people leaving their homes marked the largest population migration since World War II.

Getty Images

At the height of the European immigration crisis in 2014-2015, hundreds of thousands of immigrants entered the European Union, many of them to escape the civil war in Syria. Debates broke out in the EU about how to distribute asylum seekers fairly among EU countries, and most of the Eastern European countries refused and closed their borders.

Merkel made the opposite bold decision, opening up Germany’s borders and allowing more than 1 million refugees and immigrants to enter Germany in 2015. This move is reflected in the picture below. Eurostat’s immigration data can only be traced back to 2008.

Merkel’s immigration policy at this time was seen as a catalyst for right-leaning voters to flock to anti-immigration German parties. However, in 2021, its share of votes fell and the party won 10.3%.

Disposable income

One of the issues highlighted in the discussion of family income in Germany is the widening gap between the rich and the poor. In particular, the differences between the east and the west of the country reflect the problems left before the reunification of Germany in 1990.

In 2020, the OECD pointed out that although the gap in per capita GDP between German regions has narrowed in the past 18 years, “the gap between regions is still higher than the median of OECD countries, and Hamburg’s per capita GDP is the second of the two. Times Mecklenburg-Vorpommern (a neighboring country).”

Shoppers browse items for sale in a gift shop in Mannheim, Germany.

Christian Bossie | Bloomberg | Getty Images

Euromonitor International It was stated in the September report, “Despite income growth and measures to promote income equality, regional differences between eastern and western Germany still exist.”

Public investment

One of the main criticisms of the Merkel government is that it ignores infrastructure spending and investment because it is clearly unwilling to borrow money and undermines its strict adherence to a balanced budget. The now infamous “schwarze Null” or “black zero” budget rule is seen as a symbol of Germany’s obsession with stingy.

The decline of Germany’s infrastructure is due to this insufficient spending. Given the low interest rate environment, the government has been widely criticized for restricting borrowing and spending when it could have borrowed cheaply. Others criticized Germany’s lack of spending and declining demand in Germany for causing imbalances in the euro area.

“After the 2008 and 2011 crises, the German government (and other governments) failed to make debt financing expenditures, which to a large extent led to a long-term lack of private demand, a tilt in the balance of savings and investment, and global and internal distortions in the euro. Trade imbalances,” said Stefan Koopman, senior market economist at Rabobank, in a report.

A national election poster for the Christian Democratic Union (CDU) party near a residential apartment construction site in Berlin’s Mitte district in 2021. After years of low levels of public infrastructure investment, all political parties have reached a broad consensus that more will be needed in the next ten years.

Bloomberg | Bloomberg | Getty Images

The chart below shows the uneven levels of gross capital formation (formerly known as gross domestic investment) in Germany, the United Kingdom, and France since 2005.

Capital formation includes increasing expenditures on fixed assets of the economy, such as land improvement and plant, machinery and equipment purchases, road and railway construction, etc., including schools, offices, and hospitals.

Experts point out that investing in such infrastructure is a problem that the next German government must solve.

As we all know, Germany can no longer postpone much-needed infrastructure spending. As the joint negotiations to form a new government proceed, all parties are concerned about the extent to which they can promote fiscal easing.

Happy
Happy
0 %
Sad
Sad
0 %
Excited
Excited
0 %
Sleepy
Sleepy
0 %
Angry
Angry
0 %
Surprise
Surprise
0 %