Tuesday, October 7, 2014

The German Engine Falters

October 6, 2014
Dan Armstrong in Germany

Normally referred to as the engine of the European economy, the latest figures for the German economy are sobering. The normal complacency concerning the economy could well give way to a more strident approach by government.

Up until now, the new coalition of CDU/SPD has enjoyed relatively broad support. The bourgeoisie have praised the aim of balancing the books and foresaw revenues actually exceeding expenditure within a year or two which of course would mean a reduction in the debt service charges. And the labour movement has been mainly quiet since last December when the Grand Coalition came into office, primarily because the SPD ministers fought for and won several concessions and reforms on pensions, benefits and mainly the introduction of a legal minimum wage across all industries.

Polls reflected this situation with the CDU/CSU stable at around 40-42%, boosted by the collapse of the Free Democrats, and the SPD on a low 23-24%.  The Linke has made no headway for a long time now, having lost seats in four western parliaments and were badly weakened in Brandenburg because of their collusion with the SPD in budget cuts but have hung on to support in the east in Saxony and Thuringia where they are the biggest party and may even enter a coalition with the junior SPD; in Thuringia however the Linke led by the devout Christian Ramelow is programmatically indistinguishable from the social democrats with only a timid programme of more teachers and more police. 

Under the quiet surface, there has been an erosion of benefits, growth of food banks, moonlighting jobs, and so on.  The lowest layers and some nationally orientated bourgeois forces are finding expression on the right with this new party,  the AfD,  picking up 7-10% of the votes in regional elections on an anti-Euro and anti-migrant platform. The AfD has been taking votes in almost equal  numbers from all the other parties, including the from Linke.

But politics rests of course on economics. And  the second quarter of this year saw an actual fall in GDP by 0.2%, the opposite of what the experts had been predicting. Worse, today's figures for the third quarter show a crumbling of industrial orders by 5.7%, the biggest fall since the crash of 2009 and foreign orders declining by a huge 8.4%. Machine tools and vehicles suffered even worse, dropping by 8.5%. This is due to three factors: the stagnation in the Eurozone, the poor growth in the BRIC countries once hailed as the saviours of the west, and the political crisis continuing in Ukraine.

Since no changes in any of these three areas is in sight, we can expect the beginnings of a revival in the activities in the German labour movement in the next period.

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