this video is made possible thanks to invido AI more details coming up soon Germany is along with Spain and Austria one of the few European countries that has not yet recovered its pre-pandemic consumption levels and it's not just consumption no matter which metric you look at GDP GDP per capita investment they all point in the same direction as of today Germany is the sick man of Europe the days when German politicians could lecture the rest of the world on how to manage the economy are almost laughable look at the lazy Germans they should take a
queue from down toe countries like Greece and in this case they would be right to say so not just because the Greeks are working their backsides off but because the Germans work the fewest hours by far the least in the oecd and probably the world in Germany it's almost a national sport to take medical leave from work and no this is not an exaggeration ask anyone who lives there and tell me about it in the comments however the truth is that this matter is anything but funny and not only because economic stagnation is in itself
a great tragedy Russia China North Korea Iran the geopolitical situation is redh hot and it's precisely at times like these that we cannot afford to let Europe's locomotive run out of fuel but it doesn't end there Germany is not only Europe's locomotive it's also its best Factory it's the country that adds the most value to manufacturing leaving other countries far behind and with its huge GDP and its economy focused on making things Germany accounts for 27% of all industrial production on the old continent put another way Germany's economy is so big that one fall from
them could drag the whole continent down with them and look new stories about German military men doing drills with broomsticks because they don't have enough weapons can be very funny but if things get out of control and we go head long into a war I'm sure we won't find them so funny anymore and I know what many of you are thinking but come on Germany may be in crisis but isn't it a temporary recession caused by the Ukraine war and Russian gas aren't you guys just being melodramatic well believe me we are the first to
wish it were so but there is more and more evidence more and more proof that the German problems go much deeper than they appear at first glance so how is the German economy really doing is it just a temporary slowdown or is it worse than we thought and perhaps the most important question what can be done about it today on visual economic we tell you all about it but first after years of making YouTube videos I've seen just how much goes on behind the scenes recently we found a game-changing tool inv video AI with its
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our exclusive code visual economic 50 to double your video creation credits in the first [Music] month on this channel and in the economic media in general a light Motif has been repeated for the last 2 years German factories cannot operate efficiently because electricity is too expensive this argument makes perfect sense in just 20 years cheap nuclear power has gone from 30% of the energy mix to 0% its substitute coal and gas gas Russian gas more than half of which came from Putin's dictatorship even as recently as 2021 this gas has risen in price because after
the sanctions Germany had to start processing liquefied gas from the United States with all that this entails if you want our opinion it would not be at all surprising if the Russians had corrupted the German government to shut down the nuclear power plants but that is another matter the point is that Germany exists hooked on gas and that explains why after the Ukrainian war broke out the National Industry consumed 0.6 ter hours less energy every day we're talking about Savage losses in production of 18% now the impact of the increase in the price of electricity
exists that cannot be denied however look at this graph the price of gas is already worth 10% of what it was at its peak in 2023 and has practically Fallen back to its pre-war price but despite this German industrial production has f failed to regain its previous Pace while in 2008 everyone admired the flexibility and resilience of the German economy now it seems that a single blow has been enough to leave it definitively on its knees but let's not jump to conclusions too quickly okay the energy shock can't explain the entire problem but since the
pandemic there has been another major Global event that has hit the German Nation particularly hard we're talking about China's aggressive export policy and the euroamerican response [Music] let's remember what we said earlier the German economy is much more dependent on industry than its neighbors and if we're talking about German industry we have to talk about cars and not just any type of car but vehicles with combustion engines such as those of Volkswagen BMW Mercedes-Benz Audi and not only that because if you're European you will surely also be aware of a town or city in your
country that basically survives thanks to one of its factories even if they are outside Germany the problem in short the energy transition along with with the switch from the combustion engine to the electric car Chinese subsidies and American tariffs have mortally wounded this country and the Germans have not been able to react in the 2008 crisis China was one of the main reasons why Germany was able to weather the recession so well sales to the Asian giant sword at the same time as German producers carved out a niche for themselves in the growing Chinese market
what happened next we all know Chinese factories stopped manufacturing German vehicles to focus on domestic Brands such as byd which Direct ly copied the Europeans you could say that the Chinese took advantage of all the investment and knowledge that came from the West to develop their own industry an industry that has also received very generous subsidies from the Chinese Communist Party the result after a long period of stagnation sales to China have begun to decline sharply now wait a minute because here there's also a bit of a catch as with the energy issue the substance
is true but the magnitude is much less significant if you look closely the rise in 2008 was evident yes but it was barely 0.7% of GDP P at its highest peak in other words China's share of German economy remained relatively small and the reason for this is easy to understand German exports are extremely Diversified sales of vehicles and parts to China have declined yes but they have been partly replaced by other types of exports such as those to the United States in reality the overall balance has not Fallen as much as many would suggest Biden's
protectionist policies have certainly not helped this to happen but neither have they prevented German exports from continuing to grow strongly in the US and in other words China may become a massive headache in the future but it doesn't explain the huge recession Germany is in today at the end of the day it's very easy to blame problems on big events like these but they are certainly partly right but as we mentioned at the beginning of this video it's possible that the collapse of the German economy has much deeper Roots do you want an example you
only need to look at their demographic pyramid well not so much pyramid but it looks like jabber the Hut on a bad day of course this isn't a problem unique to Germany but let me give you a fact to illustrate the magnitude of the problem in Germany the number of deaths exceeded the number of births in 1970 already 50 years ago or if you prefer a more indirect metric the internet infrastructure is of the same quality as that found in Romania but why boomers are probably not very interested in watching Netflix on 4K the German
population is rapidly aging and there are quite a few studies that find a very strong correlation between aging and loss of economic dynamism in the end a large number of entrepreneurs are young and without them there are no new companies to unseat the Giants that have been at the top for almost a century you only have to compare the date of creation of American Titans such as Facebook or envidia with the German ones which in many cases already existed before World War II and if you add to this the fact that as we have seen
Germany has the lowest working hours in the oecd and probably in the world then the stagnation of the Colossus is no longer so surprising so far they've been able to defer this problem with immigration to give you an idea between 2013 and 2022 Germany was responsible for almost half of the entire net inflow of immigrants to Europe with almost 6 million immigrants but let's be honest this immigration is as a rule low skilled nothing to do with the wave of Engineers and doctors who arrived in Germany following the 2008 crisis during that time this country
benefited enormously from all this immigration but now it's German Engineers who are looking to go abroad to give a concrete figure today Germany receives in relative terms between five and 10 times fewer qualified workers than the United Kingdom Canada Denmark and of course let's not mention the USA the reasons well it's not very clear immigration laws are some of the most open and permissive on the planet particularly with skilled immigration but it seems that these profiles prefer to go to other countries either because they see better opportunities because of taxes or simply what could it
be because they dread the idea of having to learn a language like German be that as it may the fact is that the country has entered a vicious circle to meet the new challenges Germany needs to attract young talent but with such a severe economic recession no one lists this country as their number one favorite destination however that's not the worst of it Germans may look like tough guys but when it comes to investing they are the opposite many people would rather keep their money in a bank account with negative real interest rates than put
it in the stock market because they don't invest they don't even invest in housing to give you an idea only 50% of Germans live in their own homes compared to almost 80% in other Western countries for Germans the riskiest activity to which they can expose themselves is buying government bonds and all this explains why although Germany is one of the world's biggest research and development Spenders we aren't seeing very disruptive Innovations either why because investors act like ordinary Germans always playing it safe and naturally without disruptive investment it's very difficult to adapt to change the
defining characteristic of the seemingly endless decline of Germany's industrial production is its broad base in all industrial groups during the pandemic and after it was mainly intermediate and capital goods now the Malay is much broader the pandemic and the trade war with China has been the spark that has exploded a problem that has been dragging on for years in fact if we break down the different contributions to industrial production we see that the two things that stand out the most are the problems of investment and with intermediaries and in relation to all this let me
ask you another question what are the best universities in Germany because if I asked you about the us or the UK you wouldn't have any doubts but Germany its best university is Munich and it's only 48th according to a Global ranking that's pretty low in the US universities are basically giant Laboratories in which classes are held from time to time but in Germany and the European Union there they are more like placement agencies for civil servants with very little connection to the world of work and this is just an anecdote but is it a coincidence
that one of the most successful departments in European universities is the department that studies economic degrowth yes economic degrowth as a goal is not only a thing of crazy hippies European universities are are also putting a lot of money into that harmful nonsense the degrowth thing is nuts it's probably the biggest nonsense you hear out there even worse than communism but there go the Europeans with their taxes financing pipe dreams universities public universities let's remember are increasingly part of the dominant political agenda and if we add to this the lack of qualified Personnel we better
understand things like the subsidy that Germany hat to pay Intel $10 billion so that it would not leave the country and whoever talks about Intel also is talking about Tesla and tsmc companies that have maintained a large part of their activity in the German speaking region on a shoe string by the way speaking of Tesla do you remember the German car brands well not even all of them together have a market capitalization equal to the giant built by Elon Musk of course if these American companies wanted to grow in Germany they would face another major
problem the energy [Music] transition let me explain the German economy is highly dependent on co2 emissions its rate of emission per person associated with industry is almost twice as high as that of France and which country has one of the highest CO2 taxes that's right deutchland Germany in other words any industrial initiative that hopes to solve the problems is going to run into a wall because it has shot itself in the foot with the energy transition now let's stop for a moment because it's not always a matter of ending on such a Negative note it's
not the first time that Germany has been the sick man of Europe in the 1990s in fact it was also growing below Spain and Greece and guess what it was able to turn things around in the last 2 years GDP has fallen less than industrial production basically because industry has become somewhat more efficient in other words it is doing more with less and on the energy front there is good news on the horizon Decades of subsidies have failed to remove coal from the energy mix and increased the presence of Renewables but a few months ago
a historic deregulation package was approved to give you an idea just 2 years ago a wind farm of only three windmills required a report of more than 36,000 pages but now many of the procedures have been cut to zero you could see the result on the screen and unprecedented Boom the country is wounded yes and the challenges ahead are enormous but if history has taught us anything is that we should never ever give up on Germany by the way in the next video we'll talk about how alternative for Germany or afd the new far-right party
wants to change the country's economy stay tuned to the channel and subscribe so you don't miss it but for the moment it is now your turn did you know about Germany's situation is it really a transitory problem or does it suffer from chronic problems will it manage to get back on its feet to lead Europe once again before it's too late you can leave me your answers in the comments and as always don't forget that here on visual economic we release new videos every week so subscribe to this Channel and hit the little bell so
you don't miss any of our updates and if you like the video go ahead and like it and I'll see you in the next one all the best see you next time [Music]
