The simultaneity of the multiple crises currently rocking Europe reached another peak this week. First Gazprom stopped gas deliveries through the Nord Stream 1 pipeline, shortly afterwards the federal government announced a quite massive relief package, the financing of which was still anything but clear at the end of this week.
Of course it is right to cushion stress. Helping low-income people cope with rising energy costs, reducing automatic tax hikes by eliminating so-called cold progression. However, the aid packages currently give the impression that they really want to please everyone.
There is help, rescue, control: the strong state, as our cover story shows, is celebrating a comeback in the midst of multiple crises: not only as a rescuer, but also as an investor, protector, and caretaker. The state is now expected to shield the population from stressful changes, although it can’t really do that, says Ifo President Clemens Fuest.
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Because this crisis is different. Rising energy prices are hitting the economy hard. According to a recent survey, more than 90 percent of German industrial companies see “strong” to “existential” challenges. They are already paying eight times as much for gas as their US competitors. And hardly anyone doubts that energy prices in Europe will remain high, if only because the continent will increasingly rely on expensive liquid gas in the future. However, if the costs rise, the operation of more and more machines and systems becomes unprofitable. It is a doom-loop.
>> Read our cover story here: The state as savior in every crisis? About the fatal error of the fully comprehensive policy
In addition to the debate about relief, Germany therefore needs a discussion about where growth should come from in the future. The rescue policy of the past few years was above all possible because the economy grew over many years – driven by global demand for machines, systems, cars and chemical products from Germany. Especially in China.
Investments in digitization and decarbonization will be cancelled
This business model no longer works. Optimists swear by the power of change of German small and medium-sized businesses, which have repeatedly been able to adapt to new situations in recent years. Except that we are now in a completely different situation than at the time of the financial crisis after 2008.
Companies don’t just shut down plants. They are also saving on their future: because of the high energy prices, they are investing less and less in research and development, as various studies show. That alone is a worrying development, because investments in digitization and decarbonization in particular are currently being canceled.
The two major projects have a dimension like that of the industrial revolution. This applies to the force of change. But also for the opportunities that this change can bring. The demand for efficient machines, automated systems and data-driven processes has never been greater.
The associations are drumming for more support for the economy. This is understandable, but not enough. Because aid packages will not bring this country into the future. A pact for the future is needed for the German economy, a real growth program.
This includes a reduction in corporate taxes as well as a real reduction in bureaucracy – which the traffic light government had promised, but has so far postponed further and further. Incidentally, bureaucracy has long stood in the way of the federal government’s big plans: the figures show that tax research subsidies for companies, for example, are hardly ever used because the application process is too complicated.
Germany is bureaucratizing itself in a dead end. But what is also true: times of crisis are the best times for such changes. Now all that is needed is a federal government that recognizes this.
More: Economic institutes are forecasting a recession and damage of up to 150 billion euros for the first time