Hans-Werner sinn, the influential eminence grise of the German economy who, among other things, leaves his mark on the economics pages of Bild, has no doubts: the next stability pact must not provide for discounts on investments. “In the face of growing energy – she says – we cannot respond by increasing expenses”. Thus the voice of traditional Teutonic austerity, but which falls in a delicate moment of transition of the economic model beyond the Rhine.
Stock exchanges latest news: Germany in recession, but stock prices on the rise
This morning other warning signs arrived for the Germany already in technical recession: theSentix index for the euro zone it fell to -21,5 points in September from -18,9 in August, below the -20,0 estimate signaled by a Reuters poll of analysts. “The situation in Germany remains particularly precarious. We are measuring the weakest situation here… since July 2020, when the economy was slowed by the first coronavirus lockdown,” said Sentix CEO Manfred Huebner. The data on the July trade surplus, down in July to 15,9 billion against the positive 18,7 in June.
The financial markets, today orphans of Wall Street, respond with the plus sign to the difficulties of the leading economy of the Old Continent: Frankfurt climbs, picks up speed Piazza Affari +0,7% one step away from 29 points. The index Eurostoxx rises to the maximum for three weeks under the impetus, among other things, of Novo Nordisk, the Danish pharma group which has strengthened its leadership on the European Stock Exchanges. The measures taken by China in favor of the real estate markets are the driving force behind the rise, but, even more, the feeling that the slowdown in the Eurozone, especially of the Made in Germany, will push the ECB to moderate the upward thrust of rates despite inflation remains beyond the danger level.
Will the German slowdown push the ECB to moderate rates?
We won't have to wait too long to get an anticipation of the climate in Frankfurt a week before the board meeting. Christine Lagarde will speak in the afternoon followed during the day by Joachim Nagel, president of the Bundesbank, but also by the doves Fabio Panetta and Philip Lane. It will be a first test on the orientation of the central bank, one of the areas of comparison on Europe's choices. But not the only one: the ECB's monetary policy is one thing, forced to deal with the needs of economies that are most often divergent, while the fiscal policy of the various governments is another, conditioned by the different conditions of the various countries.
Germany: Scholtz launches substantial aid package
And here Sinn's warning takes on a bitter political flavor for the Bel Paese: in the face of the limits of our public finances, exhausted by the superbonus, there is a very different space for the German budget, the only triple A among the G7 countries. Last week, after a sharp debate between the governing coalition parties in Berlin, the government finalized a aid package to companies and fiscal stimulus to households which will lead to a drop in tax revenues by about 7 billion in the first year: 2,6 billion for the federal government, 2,5 billion for the federal states and 1,9 billion for the municipalities.
Theincrease in payroll: in Germany wages have so far grown in 2023 by 6,6%, more than inflation under the pressure of the agreements for the strongest categories, metalworkers a head but also Lufthansa.
For its part, industry is celebrating, albeit with caution, the package of tax measures aimed at small and medium-sized enterprises. One of the main elements is a new mechanism investment grants in favor of the climate – part of the coalition government program agreed in 2021 – to help companies accelerate the process of reducing emissions. But most of the plan in 10 measures presented by Scholz on Tuesday had already been announced, including the special fund for climate change and the value of approx 212 billion euros for the period from 2024 to 2027.
The industry suffers but the car in Monaco pushes on the electric
These will certainly not be the decisive measures to reverse the course of an industrial system which is paying dearly for the transition of the car, from the combustion engine to the electric one which has guaranteed an unexpected advantage for Chinese manufacturers, rather than the delay in digital compared to the USA, starting from the production of chips. It will take time to recover. But also a coup of kidneys comparable to that of the beginning of the millennium, when the reforms of the labor market (and the spaces guaranteed by Brussels on the Maastricht reholes) allowed a leap in quality that today, given the rivalries within the coalition of government (on energy in particular) makes it difficult.
But the temper of the Bundesrepublik remains of good fiber. To understand it these days it is worth making a trip to Munich, where the Mobility Show is held, heir to the old car shows. The home car giants take to the stage, ready to challenge the Chinese groups and Tesla at all times, which by now is somewhat German given the plant in Saxony. Among the thirty-nine brands present, the large team of car manufacturers with a Beijing passport stands out, who have decided to hold in Monaco, for the first time outside China, the annual congress dedicated to electric vehicles. But the home team replies with Mercedes, which presents the new E-Class and the powerful AMG GT, and then Smart with the #1. There are the stands of Porsche, Audi, Volkswagen, Seat, Cupra, with the Dark Rebel sports concept and the Raval city car. BMW is exhibiting the new electric Mini in the Cooper and Countryman versions and the new 5 Series, also in the i5M version while Stellantis plays at home with the Opel brand and the new Experimental concept, in addition to the new Corsa Electric and the Astra Sports Tourer Electric.
