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Germany in the Doldrums

Germany used to be a beacon of stability, but now the prevailing view is that the country can no longer get anything right. Sitting on its laurels for too long left the country ill-prepared for today’s world, and the failure of the ruling "traffic-light coalition" to take decisive action has only made its problems worse.

BERLIN – There was a time when, in the eyes of many, Germany could do no wrong: the economy was strong, unemployment was low, and its strategy of fiscal consolidation was successful. A broad political consensus provided stability, and German society was not beset by deep divisions. As former Chancellor Angela Merkel’s 2017 campaign slogan put it, Germany was “a country in which we live well and happily.”

As the year draws to a close, Merkel’s slogan, forgotten even by her own party, comes across as wishful thinking. The prevailing view now is that Germany can no longer get anything – or at least the important things – right. The public’s mood is weary and pessimistic: 46% of Germans believe that they will be worse off in ten years. At the end of 2022, only 28% were hopeful about 2023, the most negative response since 1951.

They were right: 2023 turned out to be a dismal year for Germany. The economy has been experiencing a mild but persistent recession, and the prospects for 2024 are equally gloomy. A severe and long-unresolved budget crisis paralyzed the federal and state governments, infighting among the three coalition partners is rampant, and many reform efforts are currently stalled or have been abandoned. No wonder Krisenmodus (crisis mode) was the German word of the year.