We can assume this was about as sincere as his praise for the German national football team following their early World Cup exit at the hands of Paraguay. ‘We are proud of you’, Merz posted on X, immediately after the match – he has since deleted it.

In economics, just as in football, reality wins out. No amount of denial will stop it from imposing itself. And the reality of Germany’s economic decline is certainly making its presence felt.

Just this past week Volkswagen (VW) announced a wave of plant closures. This goes far beyond what had been expected just a few months ago. In December last year, VW closed a plant for the first time in its near 90-year history, in the city of Dresden. Now the plants at Hanover, Emden, Zwickau and Neckarsulm are also set to shut by 2032.

As one engineering journal explains, these cuts go deeper than the 46,000 direct redundancies. At least another 15,000 management positions are also set to disappear. More importantly, the closures will hollow out entire regions – especially those that have long been economically weak, and where VW has always been the largest employer.

In the eastern city of Zwickau, VW employs 8,000 workers directly, and another 20,000 work for its suppliers. ‘If those jobs were to disappear, it would also affect the retail and hospitality sectors’, reports one trade publication. The picture is no different in Emden, in western Germany. Estimates suggest around 100,000 jobs will be lost in coming years, mostly in Germany.

VW – the company that stood for German engineering prowess for decades – is only the most spectacular example of the country’s deindustrialisation. Germany continues to fall behind not just international competition, like China, but nations within the EU as well. As Reuters reported in May, since 2019 ‘Germany’s industrial sector has shed 341,500 jobs, a decline of just over six per cent, meaning one in 17 industrial jobs has disappeared’.

There is no end in sight to the nation’s economic travails. According to a recent survey by the Germany’s Chamber of Commerce, only 23 per cent of businesses are planning new investments. Thirty-four per cent intend to cut their investment budgets – a picture affecting the entire traditional industrial base, from chemicals to automotive to plant engineering.

Yet, rather than confront the problem, our weak and unpopular elites have continued attacking those identifying its cause – namely, Germany’s green-energy transition. Indeed, Merz’s predecessor, Olaf Scholz, spent his time labelling the right-populist AfD a ‘Schlechte-Laune-Partei’ (bad-mood party) for its opposition to Net Zero.

There is no talk of abandoning ‘green-energy transition’, despite it driving a surge in energy prices. No willingness to fundamentally change Germany’s course. Which is hardly a surprise. For years, Germans have been governed by politicians drawn from the same coalitions, all following the path of least electoral resistance – appealing to their ever-shrinking core constituencies while ignoring the structural challenges the country actually faces. The prevailing motto is to muddle through. They cling to the hope that the anti-populist ‘firewall’ holds, and that jobs lost in traditional industry will be offset by the one sector still showing robust growth – government.

And what is the political class’s central strategy for cushioning the effects of Germany’s economic decline? Taking on ever more debt. On 6 July, the government presented its draft budget for 2027 and its financial plan through to 2030. It featured record levels of both expenditure and debt. Net borrowing of nearly €119 billion is planned for 2027 alone – meaning almost one in every three euros spent will be borrowed. By 2030, interest payments on this debt alone are projected to reach roughly €80 billion per annum, double the current level.

Some of this borrowed money is meant to renew Germany’s crumbling infrastructure. But citizens are losing faith that the state can manage even that. For instance, despite massive investment, Germany’s rail system remains hopelessly unreliable. At most, 40 per cent of trains reach their destination on time. On 23 June, the entire network ground to a halt for more than two hours after a software update error – a disruption without precedent since wartime.

Poor project management has produced similar problems elsewhere. A case study is Stuttgart’s decades-long construction of a new railway station. It was originally due for completion in 2019, but is now unlikely to open before 2031, and has cost overruns of roughly €10 billion. No wonder members of the public are sceptical that the borrowed billions will be spent well. As things stand, borrowing will most likely only prolong the decline – allowing a fearful and directionless political class to attempt to placate its remaining voter base with promises of money.

‘Europe is a sick man who owes the greatest thanks to his incurability and the eternal transformation of his suffering’, Nietzsche wrote in The Gay Science. To him, this was no bad thing. It was a sign that embracing life’s challenges could itself become a source of intellectual vitality and growth. Echoing him today, we might say: Germany is a sick man too – only its politicians are too scared of change. Instead of hollow appeals to optimism, the country needs new leaders with the courage to name its problems – and the resolve to actually fix them.

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