what's happening to the world's fourth largest economy in contrast to other large industrial nations. and compared to europe, germany's what's happening to the world's fourth largest economy in contrast economy is weakening. companies are complaining about a poor business environment due to high energy prices. there is already talk of creeping de industrialization and some economists and politicians believe germany is once again the so called sick man of of creeping de industrialization and some economists and politicians believe europe. at the same time, right wing populist attitudes are on the rise and more people are critical of democratic principles are prosperitity ad democracy in danger. on to the point. we ask a great power in trouble. what's wrong with germany? hello and a very warm welcome to this

week's to the point. i'm javier and i'm happy to introduce this week's guests. anna devs is a government reporter for bloomberg news based here in berlin. valerie. june is a journalist and editor at the berlin bureau of the german newspaper. and kaa hoa is a researcher at the king's college in london and author of the best selling book beyond the wall about the former german democratic republic to all of you. very warm welcome as well. and thank you for being with us. valerie. i'd like to start with you. most of our viewers are not in germany and might be wondering why we're even having this discussion. how would you describe this sensation, this feeling in germany that things are not going well? i feel like discussion. how would you describe this sensation, this feeling in when the war started the russia ukraine war started on february 24th, 2022. basicacally germany was right at the center

almost immediately because of the energy crisis that followed germany was heavily dependent on russian gas. and that sort of became the country's defining moment of a downward spiral that was heavily dependent on russian gas. and that sort of we're watching right now unfold. and i think that basically made the country so aware of its vulnerabilities that weren't quite as visible before visible in the country itself. but what about outside of the country you live in london you work in london? do you think people there also what about outside of the country you live in london see germany as a struggling country right now? i think so, i mean, uh there is a tendency here, i see germany as a struggling country right now? i think think to compare britain to germany, particularly post brexit, um where people are always looking for figures to show, you know, that it either worked or didn't work. and germany is usually used as the, as the yardstick. um and know, that it either worked or didn't work. and germany

i think at the moment in particular, you know, growth figures are right at the center of this debate. and the argument is that the uk economy has grown faster um than that of germany. and so that, that certainly is a sense that, you know, germany is declining whilst um than that of germany. and so that, that certainly britain is sort of doing ok. um, or at least that's the, um, the message that the, the, the government and the official figures tell the figures are important. we're going to take a closer look at them later on anna. however, you know, not too long ago under angela merkel germans were very confident in their country and in their future, it's not that long ago. to what extent do you also think um this might have to do with the change of leadership in the country? this mood swing? well, i think uh chancellor schulz has the unlucky task to tackle some of the problems which actually were already visible under chancellor merkel. but now he has a job to more or less clean up the mess if you wanna say so. um and then of course, you

have the war, you have changing global market conditions. so you wanna say so. um and then of course, you there are a number of factors and i think they all unfortunately right now work against germany. it is certainly a perfect storm. we are going to have a look at the numbers because while most industrialized nations are recovering strongly after the covid-19 pandemic, the german economy is shrinking some politicians and economists are predicting germany's downfall after decades of stability. what's more that impression of weakness is damaging germany's image. germany is the fourth largest economy in the world. this export nation wants to become a climate neutral economy, but there is not enough investment companies are complaining about too much bureaucracy, slow digitalization and high taxes. more than 40% of companies lack skilled workers. but above all energy costs are high. a consequence of years of dependence than 40% of companies lack skilled workers. but above all

on russian gas replacing it is expensive. one key industry is especially affected, the chemical sector sales are down and on russian gas replacing it is expensive. one key industry it is reducing. production companies are now threatening to migrate for example, to the us which offers attractive subsidies. and the german auto industry fallen behind. electric cars have long been coming from china. germany's economic growth is embarrassingly slow the german auto industry fallen behind. electric cars have long according to the oecd, it ranks 19 among the 20 largest economies and is followed by argentina. but economists do expect a recovery in 2024 thanks to falling inflation and rising wages. how deep is the german economic crisis? and i'm going to toss that one to you, valerie. the german economy, as you already mentioned was powerful thanks to cheap gas from russia but also very low military expenses and a thirst for german products coming from a booming china. all three are gone. can it actually recover from

this seemingly perfect storm? i think it would be too going too far to predict germany's downfall like from a global player at this point. um i do think germany can recover but i think as anna said, you kind of have you have so many issues that were long invisible because of growth because of good conditions because of money coming in and since it's sort of been stripped to more of its bare bones, you kind of see what's actually going on in this like skeletal germany and what structures have to be changed and fixed for the country to then prosper again in the future. and one of the most important aspects of that outlook into the future is the energy transition on germany is betting on

an ambitious transition to renewable energies, but the resulting high prices are actually driving companies away. is there a reason an ambitious transition to renewable energies, but the resulting high to believe germany is and will continue to be a competitive investment destination if this goes on? um i think the the path germany is on is is a difficult one. it's a risky one. the problem is i think the people, the germans believed in this energy transition at the outset of this current government and i think people have lost a bit, they believe in it. um also the outset of this current government and i think people because of some mistakes the government did. there were some laws which were not ideal uh and made people more scared than necessary. maybe i think uh still on the laws which were not ideal uh and made people more long run, it will work. it is also necessary. uh but right now we go through a valley of tears

i would say, what do you mean exactly when you say that people lost trust in that transition. do you think they would say bring back nuclear, bring back coal or what, what do you mean by that? i think i think the the especially the green party has a problem here because the argument is always we, we need to do this in order to save the world. and of course, then even people who are, who are not really into the details of the whole thing will understand that, you know, we we do 2% of global co two emission. i think we are responsible for 2%. so of course, every same person will ask him herself. well ok, you know, it's 2%. but what do china do what does the us do other countries in the world india? um i mean, they, they all are big co2 emitters. and the question is, of course, and it's sort india? um i mean, they, they all are big co2 of valid question, why does germany have to be like the ideal role model for everybody else? you mentioned the green party on it. it's one of three governing parties

in germany right now. kaa, some blame governments mixed signals for the internal and the internal disputes that the government has for this general distrust and how they're dealing with the economy. why is it so difficult here to provide a much needed clarity for the people? well, i think partially it's the fact that you have a coalition government in germany, which isn't necessarily the case in other countries such as um you know, the uk or the us and so you're always going to have these internal negotiations and wranglings coming into the public sphere as well. and giving the impression of a, you know, disjointed and, and disunited a government that isn't giving a clear course. i think the other issue is that even within the green party itself, um you know, you've got arguments around the transition of the economy, particularly, you know, whether or how to substitute um that part of the part, part of the energy sector that can't be um fully renewable energy to substitute um that part of the part, part of

just yet. so, you know, what do you do? you bring back nuclear? in which case, the green party in particular in germany has got a very strong legacy there of, of opposition against it, but it would be uh co2, you know, friendlier than, than most of the other alternatives, which is why many green movements and other countries support it but not in germany where that legacy is just there. um and at the same time, you know people are arguing whether gas and in what form basically is, is the substitute because at the moment, of course it's incredibly expensive to import lg. um so there are all of these arguments, i think internally both within the parties and within the coalition government that give the impression of, of a disjointed approach that isn't really leading towards sort of clear goals or a clear vision that's insecurity which is of course toxic for the business environment. now there is also another massive problem in germany or at least it's always mentioned, which is bureaucracy, there's this famous example of 45 5 file folders required for one windmill

at least it was big in the news is that that big a threat that it could harm the economy i think it already is harming the economy. i think that during, during the era of mecca, a lot of bureaucracy, the problem was there and it was known, but that during, during the era of mecca, a lot of nothing really was done about it. so now we end up having these absolutely almost caf esque structures in which people have to go back and back and back and get another permit, another permit. and of course, that makes investors more shy about investing because it's such a long drawn out process. and i think i do feel that the coalition now is trying to change that, but it's also very hard again with the coalition government that ka already mentioned having different parties, having the green party that

historically has been very fond of environmentalism and now has to kind of give up like parts of that to historically has been very fond of environmentalism and now has facilitate the transition to green energy. for example, if you put up a wood mill that might influence birds or or something that's like an example that's always given. and so basically, i think it already is part of the problem and it's something that they're trying to fix, but it's proven to be much harder to fix than was anticipated. the same goes for digitalization. a there's talk that germany is severely behind when it comes to that. what do you make of that assessment? well, i just want to come back quickly to, to the bureaucracy problem. of course, you have to ask the same political leader who introduced all this bureaucracy now to remove it again. it's course, you have to ask the same political leader who always difficult because it, it, it, it kind of undermines their own structure which they themselves have created with digitalization

um i think we all have made this experience, you know, you travel abroad, you know, to wherever in europe um i think we all have made this experience, you you want to go and you suddenly you realize, oh wow, the wifi is much better here or the the the internet connection. um so there, there has to definitely something has to happen here. but of course, again, we have then discussions about technical problems, for example, we discussed who away. and now we have this problem, ok, where you have to take a two away components from the network probably, you know, which will even slow down the whole process of of enlarging the the internet structure, make network probably, you know, which will even slow down the it faster. so, um also here again, i think uh network probably, you know, which will even slow down the we have uh the, the how can i say there network probably, you know, which will even slow down the is this feeling? ok, we have to do something about it but then you have all the technical problems really and all the legal problems also, you know, data protection

in germany is a big issue. it is a huge problem for many digital projects. actually here, you could say summing it up that it's always a battle between ideals and principles and the actual feasibility of doing things. and when it comes ideals, nothing is clear as a problem than the society of germany right now. it's not just the economic data. the german society is showing alarming trends more and more people reject politics and the state and the economic data. the german society is showing alarming trends have less trust in democracy. not only in the eastern states that we're under communist rule, but also in the west. disappointment with politics is on the rise, posing a threat to what was once a given. the mood is dark in germany. according to a survey, around 80% of germans are worried about the future. experts say this insecurity is the result of multiple crises. the corona pandemic, the war in ukraine, the energy crisis and inflation, the german government has many disagreements. most germans think it is performing

poorly. the fdp spd and greens would no longer have a majority today. even if a study shows that the coalition has initiated or implemented almost two thirds of its promised legislation. the afd which is partly right wing extremist is benefiting from rant discontent in surveys. it ranks second across the nation and even first in eastern germany, extreme right wing attitudes are becoming increasingly socially accepted. over 8% of those surveyed in the mta study express a right wing extremist world view and 20% are not clearly committed to democracy. economic researchers are warning that should germany move further to the right investors will shy away. how can the growing right wing populism be countered, anna, how do you explain that the country that has always warned the

rest of the world about forgetting the mistakes of the past is now giving far right parties record support. well you know, it might sound a bit cynical but again we follow maybe the us example here. i mean, you have, you had like a pretty right wing president in power. uh right now you have a political crisis because you have uh right wing radicals basically questioning the whole democratic system. and of course, we see a similar trend in germany. i mean, it's, you know, we have it democratic system. and of course, we see a similar trend in, in a number of european countries in germany. of course, it always has a different meaning because of our historical past. but of course, uh we are gripped by the same identity crisis which i think many western democracies face right now. um before the us, germany's history is certainly in particular, the a fd the far right party is strongest in the eastern part of the country which used to be the german democratic republic, which was under

communist rule. that appears to be a big contradiction. yeah it appears to be um i think part i, i partly agree with arnie in that it's a, it's an international problem as well. so you see it in the us but also in france with the, with the, in other countries as well where there is this affection and that, that often reflects in extremist politics, i think in east germany, in particular, there's another dimension there in that they can use this collective sense of, you know, we've gone through a different experience. we're not really feeling that this democracy that we're now part of is, is sort of um working for the, for the people. and the a fd is very, very good at utilizing that. so where people feel that, you know, those out there, that those kind of, you know, classical phrases that people use arare doing their own thing. the a fd sits in you know, pubs and bars and in local areas and arare doing their own thing. the a fd sits in and organizes local events and people feel that they're being

listened to by them. i think that's, that's one way in which this works. um and i think the other is that they are also very good at using this kind of logic or rhetoric that they're really perpetuating the peaceful revolution of 1989. so in contrast to many kind of popular opinions out there, that, that sort of suspect that east germans are nostalgic about the past. uh actually of popular opinions out there, that, that sort of suspect the the sort of rhetoric that the a fd users is, you know, you fought one dictatorship in 1989 and now the states again trying to tell you what to do. so go on to the streets again and you now the states again trying to tell you what to know, they use slogans like for the vendors. so like complete the, the peaceful revolution of 1989 and things like that. so i think that the difference is that there is kind of a, in sort of like an in group feeling amongst some east germans that they feel, you know, they have their own identity and, and the a fd is better able to, to play to that and to use that i think, than, than elsewhere where it's difficult to kind of get a whole group of people to buy into the same thing. but do you think

the current or the last governments have actually failed the to buy into the same thing. but do you think people in east germany or in the former east germany that's certainly how many people feel. um so, you know take, take like the infamous heating bill. you know, people were sort of saying that the government is trying to tell us how to heat our homes. um we're already struggling and there seemed to be very little, um, kind of communication towards trying to get people on board with this policy. we explaining what it's actually for, you know people were, had the feeling that this was done to them. um so i think there's certainly a feeling out there that concerns aren't being heard or, you know, even when the refugee crisis that is there at the moment when, when communities or individual districts are being told they have to take so and so many refugees, but there isn't actually any kind of help or support or that's how people feel anyway, in terms of housing, people supplying them, you know, finding kind of infrastructure that is there when you know, schools, sports halls and things like that are being used. um people feel that this is directly

when you know, schools, sports halls and things like that impacting on their lives without them actually getting a say in it. we can't detach the a fd from a strong anti migration discourse. german companies. this comes all together with the economy as well. are complaining about a lack of skilled labor. we know that it can only be with the economy as well. are complaining about a lack provided by foreigners. how racist is germany and how much could that affect the economic outlook? i think as a country that was majority white for or still is um could that affect the economic outlook? i think as a for the longest of its history. um of course, there is racism in germany. um there's also because i think of how conservative germany was for a long time, there was also always sort of a rhetoric around, we're not actually an immigration country. this was actually something that was debated until like 10 or 15 years ago where clearly germany is an immigration nation but hasn't identified as such

for a long time. um i think, you know, studies show that germans are open to, to immigration. and um so i think it's, it's sort of two fold, i think of course, there's racism like, of course, but there's also there was also an openness for a long time and now with inflation with the war, the crises um the pandemic, all of these overlapping crises have sort of and now with inflation with the war, the crises um halted and it a sort of a positive excitement about immigration because now the way we talk about immigration right now is solely based on refugees entering the country, not as much people coming to work here. that would be a positive narrative because everyone knows you need people to work because there are no people to work. so um

so i feel like here you kind of have to you have to look at both subjects separately. so you have the refugees coming in needing help. of course, a lot of them are traumatized. they've gone through terrible hardship and on the other hand, the economy needs people to work. the question is, can you bring the two together and that has not worked the way, especially members of the green party thought it would work out like initially in 2015. um so i think it also hasn't worked as badly though as some conservative pundits are saying, like i looked up the numbers today and after six years of being here, 64% of people who are, who were refugees do work. so there is like a positive trend or after seven years, i think there is a positive refugees do work. so there is like a positive trend trend, but it's sort of not enough to keep um a society that is already under stress um positive about

refugee immigration. certainly a process for sure. now we have a society that is already under stress um positive about a few more minutes left. and i would like to look into the future, which is always difficult, anna, this has all been very grim, right? looking into the future how optimistic are you about the future of germany and its role in the world as well? well, i think we have proven in the past that we've been pretty good in handling crisis. i mean, at the end of we have proven in the past that we've been pretty the nineties, we also managed to get out of this sick man of europe face. and so i, i would hope that we are able to draw the necessary consequences i think we need to maybe complain a bit less maybe be a bit more optimistic about the future that would already help. um and i think we, we would need a chancellor who'o's, who's not only, you know, talking would already help. um and i think we, we would

reality nights, but also addressing the problems telling people what has to be done and then just have to execute reality nights, but also addressing the problems telling people what actually, the, the, the necessary measures which will be necessary to adopt to a rapidly changing world, a world that is certainly watching. do you think this, let's say more to adopt to a rapidly changing world, a world that humbled version of germany could also be a good thing um i'm also a bit cautious, you know, looking back as a story in germany has been, has been declared that several times to be, you know, a stagnating economy one that is slowing down and it's always kind of like this big ocean liner, you know, of an economy that moves very slowly and moves towards a crisis and it's difficult to turn around, but equally, it does move very slowly and there is time i think to sort things out. i think the problem is that quite often you know, we've talked about some of these issues already um, kind of the ideal gets in the way of

of actually looking at what needs to be done. and and we end up basically with politicians arguing among themselves about the kind of ideal ththat they want. and actually in reality, the things that are necessary to, to get close to it rather than directly to it. um and often along the way, i think lots of people feel um literally left behind. you know, this phrase is often used as a cliche, but it is, it's definitely an issue and we'll see how that unfolds in this ocean liner. we at least we three here are, thank you so much to all three guests. thank you so much to you for watching. remember, you can always watch our