The country considered the most powerful economy in the European Union is now in deep trouble, causing citizens to become increasingly pessimistic. Germany narrowly avoided a recession in the third quarter, according to official data released on Wednesday, which is somewhat of a relief for Europe’s largest economy as it faces challenges, CNN writes.
PROČITAJTE VIŠE:
Gross domestic product grew by 0.2% in the period from July to September, thanks to an increase in government and consumer spending, after contracting by 0.3% in the previous three months, according to data from the German Federal Statistical Office (Destatis).
Destatis revised GDP data for the second quarter downward from -0.1%. The German economy shrank last year for the first time since the start of the COVID-19 pandemic. Forecasts are not much brighter: The International Monetary Fund predicts zero economic growth this year, the weakest performance among major economies.
Volkswagen as a mirror of the crisis A large drop in profits at Volkswagen has further exacerbated the bad news about economic growth. The problems facing the German economy are reflected in the crisis at the country’s largest manufacturer, which has announced that it could close factories in Germany for the first time in its 87-year history and lay off thousands of workers. Volkswagen announced on Wednesday that its operating profit for the nine months to the end of September fell by 21% compared to the previous year, to €12.9 billion ($14 billion), hit by weak results from the main brand and restructuring costs. Vehicle sales fell by 4% due to particularly weak demand in China, where it is losing market share to local electric vehicle brands.
The results “show an urgent need for action in a volatile environment characterized by intense competition,” said chief financial officer Arno Antlitz on a conference call with analysts and journalists, warning of “painful” decisions.
“We haven’t forgotten how to make great cars,” Antlitz continued, but stressed that costs in the company’s German operations “are not competitive.”
“Things can’t stay the way they are now,” he added. The company will continue negotiations with unions and employee representatives on Wednesday and discuss “possible factory closures in Germany,” Antlitz said.
Volkswagen later said in a statement that employee wages would have to be cut by 10% to protect jobs and secure the company’s future. The next round of negotiations will be held on November 21, and strikes are possible from December 1 if no agreement is reached. Pessimism in the private sector The deterioration of Volkswagen’s prospects points to increasingly difficult conditions in Germany’s private sector.
According to research published last week by S&P Global and Hamburg Commercial Bank, manufacturing and services are experiencing the largest decline in employment this month in the past four and a half years. Business and consumer confidence are at low levels.
“The biggest concern right now is the great pessimism in Germany,” said Marcel Fratzscher, president of the German Institute for Economic Research in Berlin.
“This mental depression, this incredible pessimism is perhaps the biggest short-term obstacle,” he told CNN.
Layoffs at Bosch as well
The president of the German auto parts supplier Bosch warned on Thursday of a decline in revenue in the coming year and said he could not rule out further layoffs in Germany, in addition to the already announced 7,000 job cuts.
The announcement, made by President Stefan Hartung in an interview with the Tagespiegel newspaper on Thursday, further contributes to growing pessimism in the automotive industry, which is key to Europe’s largest economy. Hartung said Bosch’s turnover would be slightly lower than last year’s €92 billion, while the return on sales, which they wanted to increase by two percentage points from last year’s 5%, would be at most 4%.
“I cannot rule out that we will have to further adjust staffing capacities,” said Hartung, calling on the government to do more to support the industry.
Most Germans in favor of early elections
Poor economic results and mass layoffs have further alarmed many German citizens, who have been dissatisfied with the current government for some time. According to the latest polls, most of them would like to hold early elections in order to change the government that has been in office since December 8, 2021. According to the ARD-Deutschlandtrend survey, satisfaction with the government of Olaf Scholz, consisting of the Social Democrats (SPD), the Free Democrats (FDP) and the Greens, has been continuously declining since April 2022 and has now reached a new low: as many as 85 percent of Germans are dissatisfied with its work, while only 14 percent positively assess the work of this coalition, according to Deutsche Welle.
ARD-Deutschlandtrend has been researching satisfaction with the federal government since 1997. Only four times has this indicator been even lower: once during the CDU/CSU and FDP government in June 2010 (12 percent) and as many as three times during the SPD and Green government in 2003 and 2004 (11 and 13 percent, respectively).
The red-green government under Gerhard Schröder eventually ended its term with early elections in 2005 when the CDU/CSU came to power in a coalition with the SPD and Angela Merkel became chancellor.
At the end of October 2024, most Germans also advocate such a solution: 54 percent support early elections, while 41 percent want the coalition to remain in power until the regular election date at the end of September 2025.
Among the supporters of the ruling parties SPD and Greens, a majority of 77 and 76 percent, respectively, are in favor of the coalition remaining in power.
On the other hand, almost all AfD supporters (93 percent) hope for early elections. Among the supporters of the Union (CDU/CSU), which has been leading in the polls for months, 69 percent want a premature end to the government, while among the ranks of the Alliance 90/The Greens, 75 percent of respondents advocate for it. If the Bundestag elections were held this Sunday, the conservative Union, CDU and CSU, would get 34 percent of the vote. The SPD would win 16 percent of the vote, the Greens 11 percent, while the FDP would remain below the mandate threshold with 4 percent. The AfD would get 17 percent, while the Alliance 90/The Greens would win six percent. Other parties, twelve percent.
READ MORE:
EIGHT BODIES RECOVERED FROM RUBBLE IN NOVI SAD: Two people urgently taken to hospital!
Source: Nova
Photo: Pixabay