In Berlin, the new political year was supposed to mark a new beginning. The government wanted to make people forget the clouds gathering over the economy, concerns about Germany's competitiveness and the incessant quarrels within the three-party coalition that have been undermining the executive's balance sheet for months.

Two humiliating blunders in the space of a few days were enough to put a damper on their resolutions: Foreign Minister Annalena Baerbock's trip to Australia and New Zealand was interrupted, then canceled altogether on August 15 due to a breakdown in the government plane. On August 16, a corporate tax relief plan proposed by Finance Minister Christian Lindner (Free Democratic Party) was blocked by Family Affairs Minister Lisa Paus (Green Party).

They will have to do better than this to dispel the gloom that has descended upon the country. "We feel like we're back in 2002," confided a Social Democrat official close to the government in mid-July. At the time, growth was anemic, the country had 5 million unemployed, reunification was weighing heavily on the state budget and industry was suffering from serious problems in competitiveness. "I'm afraid we're falling back into a typically German tendency to self-flagellate and brood," continued the same official, worried by the rise of the far-right AfD party, at over 20% in the polls.

Over the past few weeks, the fear of falling behind has been everywhere. "'Made in Germany' is over!" ran a headline in the weekly paper Die Zeit on August 3. "Help, our economy is collapsing!" wrote Bild, the country's most widely read daily, on the same day. "America's success is Germany's decline," echoed Die Welt on August 16.

The main reason for this depressed mood was the economy's stagnation in the spring, following two quarters of negative growth, which dampened hopes of a vigorous economic recovery in the summer, once the winter energy shock had passed. This stagnation could turn into a full-blown recession if the final figures for gross domestic product growth in the second quarter, which will be published on Friday, August 25, turn negative.

For its part, the International Monetary Fund now anticipates a recession (-0.3%) in 2023, and places Germany last in the ranking of major economies, behind the United States, Italy and France. The cause is still high inflation (6.2% in July, compared with 5.3% in the eurozone), which is weighing on consumption. Industrial production is down and construction is in freefall, under the impact of rising interest rates and expensive raw materials. As for the automotive industry, it is facing competition from electric vehicles that is far more aggressive than expected.

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