Germany is facing its worst nightmare – becoming France.
The new chancellor – likely to be Friedrich Merz if Olaf Scholz loses, as expected – has the in-tray from hell after today’s election. Huge sums of money must be found for the misfiring economy, pensions and defence.
There is huge pressure to tear up public spending and debt rules that run deep in the national psyche.
The hyperinflation suffered in 1920’s Weimar Germany, which wiped out savings and made the currency worthless, is blamed for the rise of Hitler.
More recently, German fiscal discipline was the stick used to beat Berlin’s EU allies.
During the Eurozone crisis, well-heeled German politicians lectured the likes of Greece, Italy and Spain for their irresponsible spending.
Berlin insisted on strict EU-wide limits on budget deficits and public debt after playing an influential role in financing and designing the Eurozone bailout programmes.
The glory days are over
The German economy, the richest in the EU, has been the envy of Europe for decades. Those days are over.
The economy shrank for the second year in a row in 2024, inflation is at its highest for half a century and energy prices are high.
German industry was cut off from cheap Russian gas after Putin’s invasion of Ukraine.
Production and exports have slumped, sales to China are down, and there is now the prospect of US tariffs from Donald Trump.
Infrastructure and businesses are in dire need of modernisation in a land where the fax machine is not yet extinct.
The population is ageing. Baby boomers born during all-time high birth rates between 1955 and 1969 are retiring, while the workforce shrinks.
This has created a looming pensions crisis, but reforming a system pegged to wage inflation is politically explosive with older and influential voters.
A third of all government spending – about £105 billion – went to pensions last year. That will almost double by 2050.
It’s a terrifying bill to pay but Germany also has to start spending big on defence to deter the threat of Russia and satisfy US demands.
Donald Trump won’t accept Berlin pleading poverty.