Germany is facing its deepest economic and democratic crisis in decades. Real wages are down, the far right is rising—and the new government has no plan that speaks to the scale of the challenge. A thread 🧵
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Weren’t you all saying two months ago that the agreement with the greens and scholz would be cover infrastructure, competition and green investments too?
Germany’s economy has stalled. After six years of stagnation, real GDP growth has plateaued and is almost ten percent below where it should be. The 2022 energy shock triggered the largest one-year drop in real wages since World War II. 2/10
Despite some gains in 2024, real wages are still eight percent below the pre-pandemic trend. Economic insecurity is fueling political extremism. The far-right AfD just finished second in federal elections—and since jumped to the first rank in some polls. 3/10
The AfD includes prominent neo-Nazi members and is overtly hostile to the liberal principles that Germany has sought to enshrine since World War II. Its growing popularity is not just Germany’s problem—it threatens the democratic core of Europe. 4/10
Yet the response of mainstream democratic parties has been woefully inadequate. Olaf Scholz’s SPD-led government applied fiscal austerity in both 2023 and 2024—deepening stagnation and ultimately collapsing under the fiscal straight jacket. 5/10
Friedrich Merz’s new CDU-led coalition amended the constitutionally enshrined debt brake to allow unlimited military spending—but capped the expansion of deficit spending on infrastructure and climate investments. Merz declared: “Germany is back.” But is it? 6/10
Merz champions “trickle-down economics.” The promise: defense spending is good for workers. But while arms manufacturer Rheinmetall’s profit margins skyrocketed, its workforce in Germany grew just 25%. A tank factory in Görlitz replaced a train plant & halved the # of jobs. 7/10
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