Opinion: A Damaged Germany — Europe Confronts Its Financial Suicide

The yr 2026 opens with a reality that nobody can cover any longer. The economic heartland of the continent, the bedrock of European prosperity for 3 many years, Germany has entered a structural recession. The Monetary Occasions acknowledged it clearly on the finish of 2025: Europe’s largest economic system will solely painfully get better to its pre-2020-2022 degree – that Germany of earlier than the pandemic and the conflict in Ukraine, supported by low cost vitality, globalized worth chains, and a geopolitical stability that’s now a factor of the previous.

This isn’t a brief setback. It’s a regime shift.

However be warned, this can be a mannequin that’s collapsing. Germany will not be affected by a expertise scarcity, nor from technological obsolescence. Germany is the sufferer of a collection of political selections—each German and European—which have methodically undermined its productive foundations. The query is now not whether or not Berlin goes via a tough patch, however whether or not the European Union, via ideological blindness, has orchestrated the systemic weakening of its financial core.

The economic agony

The figures are plain. By 2025, crude metal manufacturing there had fallen by roughly 10%. Iconic websites are closing or being stripped of their assets. The metal giants all cite vitality prices which have develop into incompatible with any heavy-duty exercise. The automotive trade, a pillar of the center class and a showcase of German experience, is following the identical downward pattern. From 5.6 million automobiles produced in 2017, Germany’s output fell to simply over 4 million in 2025. The 2026 projection is slipping in direction of 3.4 million.

This isn’t about defending a bygone period, however about reiterating a elementary truth. A decarbonized economic system requires extra metal, extra copper, extra chemical compounds, extra equipment, and extra infrastructure. You possibly can’t construct hydrogen, sensible grids, batteries, or wind generators on an industrial wasteland. The inexperienced transition presupposes a strong productive base. But, by 2026, Germany can have destroyed extra capability than it creates.

The pathology is imported: vitality shock, geopolitical uncertainty, regulatory inflation. The engine isn’t seized up, however its gasoline has been eliminated.

A political failure

Germany clearly bears its share of duty: a rushed nuclear phase-out, the phantasm of perpetually low cost Russian gasoline, and continual administrative inertia. These errors, which might have been corrected, have been entrenched after which amplified by a European structure that has develop into incapable of arbitrating between morality, geopolitics, and financial survival.

The break with Russia after 2022 was a historic turning level — one which might be morally justified — but it surely was dealt with with astonishing nonchalance. The destruction of the Nord Stream pipelines — for which duty stays a taboo topic — sealed an enduring dependence on American liquefied pure gasoline, which is structurally dearer. In 2026, German trade continues to be paying the value for this shock: pricey vitality, continual volatility, and a lack of comparative benefit.

A inexperienced transition conceived in Brussels as a normative ritual reasonably than an industrial coverage has been superimposed upon it. Whereas the local weather aims themselves usually are not in query, their implementation is undeniably dogmatic. Carbon taxes, environmental requirements, and transformation obligations are piling up with no credible manufacturing technique. Factories are closing sooner than they’re being reworked.

This deliberate and proactive strategy, embodied by Ursula von der Leyen, manifests itself in extended sanctions, stricter laws, and strategic centralization. Capitals are following swimsuit, Berlin particularly, regardless of Germany — the continent’s main financial energy — performing as a disciplined executor.

The distinction is stark: whereas Washington, underneath an brazenly protectionist Trump II administration, massively subsidizes its trade, Europe constrains its personal. German corporations make investments extra in Texas than within the Rhineland.

The social divide

The implications are now not summary. Communities are bled dry, industrial areas are devastated, and the center class is frightened. Political anger is swelling. In North Rhine-Westphalia, a historic stronghold of the CDU, the AfD is polling above 25 %. Within the East, it’s dominant. Amongst younger city voters, radicalism is shifting to the left.

Not an accident, as a result of deindustrialization destroys extra than simply jobs. It shatters the German social contract, based on stability, competence, and shared prosperity. The elites pave the way in which for anti-establishment forces by claiming that “ache is critical” within the title of summary targets. A union that guarantees prosperity whereas delivering degrowth can’t retain the loyalty of its folks. By weakening its engine, the European Union could also be irreparably undermining its personal undertaking.

Breaking free from blindness

On the finish of 2025, Chancellor Friedrich Merz launched an funding plan of as much as EUR 500 billion to “save trade.” A simply and laudable intention. Alas, this plan runs up in opposition to the very structure of Europe. With no lasting rest of budgetary guidelines — a golden rule for funding, partial pooling of assets, and an elevated function for the European Funding Financial institution — all the things will stay merely symbolic. Europe is aware of tips on how to mobilize lots of of billions to stabilize the monetary sector, however hesitates to take action to avoid wasting its productive base.

Three breaks are essential.

Vitality pragmatism. To not abandon local weather motion, however to prioritize over time. Securing considerable and low cost vitality sources – together with nuclear – to be able to protect the productive capability through the transition.

Strategic de-escalation. To not capitulate to Moscow or abandon Ukraine, however to acknowledge that you would be able to’t wage a protracted conflict by sabotaging your personal vitality base. Self-sufficiency isn’t morality; it’s the fabric situation for it. Morality doesn’t produce kilowatt-hours.

Debureaucratization. To not dissolve the Union, however to revive primacy over laws to politics, and to switch regulatory dogma with a real industrial coverage.

The European phantasm doesn’t finish with Russian vitality. It extends to a rising dependence on China for uncommon earth parts, everlasting magnets, and parts for batteries and wind generators. Europe claims to be reaching geopolitical emancipation whereas entrusting Beijing with the very coronary heart of its inexperienced transition, however it’s merely changing one vulnerability with one other and complicated strategic energy with real fragility.

Germany will not be testing Europe’s persistence: it’s revealing its strategic chapter. A union that sacrifices its industrial heartland on the altar of ethical posturing and poorly managed geopolitical calculations condemns itself to impotence.

The German collapse will not be inevitable, however the product of political selections.

This text was first seen on michelsanti.fr.

For extra on the writer, Michel Santi and his unique opinion items go to his web site right here: michelsanti.fr

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