Germany went from envy of the world to the worst-performing major developed economy.
Germany racked up one economic success after another for most of this century. But the loss of Russian natural gas due to the war in Ukraine has dealt a severe blow to its industry through higher energy costs.
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Basicly 16 years of stoping all green projects and then being hit by a fossil fuel crisis. The fact of the matter is that Germany had the lowest industrial electricity prices for decades, by moving the cost to households, which got some of the highest prices in Europe due to that. Gas was cheap and nearly not taxed at all. All of that in a system with clear caps on emissions and well something has to give.
Even worse a massive unwillingness to pay for infrastructure using debt. Germany is in good shape financially and it would be relativly easy to just pay for a lot of infrastrucuture. That is partly happening, but obviously there are also labour, material and time problems making this take years to finish.
Then there is a massive problem with consumption. Wages have not kept up with inflation, while there are worker shortages. Welcome to a perfectly working labour market. Anyway that obviously means less consumption in Germany, which hurts the economy.
However there is no reason that some good governance could not solve it and it is a fossil fuel crisis, which destroys industries based on processes we do not want to use due to climate change. It could be an extremly healthy crisis if managed well.
Wages have not kept up with inflation, while there are worker shortages. Welcome to a perfectly working labour market.
Not to mention the rising right wing anti-immigration rhetoric which doesn't make it easier to find workers elsewhere.
he fact of the matter is that Germany had the lowest industrial electricity prices for decades, by moving the cost to households, which got some of the highest prices in Europe due to that.
How so?
Two parts really. First of all Germany is using guranteed prices for renewables, but the plant operators still have to sell it on the electricity exchange. So when there is renewable elecricity the prices fall a lot. To still create a fair price the cost for those feed in tariffs obviously cost money, which was added on the electricity price of households and small companies.
The other one is lowering grid operating costs for large consumers to below market value. Those costs again needed to be paid, so they were added to households and small companies.
That ended up with half the cost of German household electricity being taxes and other payments to the government. That massivly delayed heat pump installations and electric car sales in Germany, as they were not able to compete as well with gas heating or combustion engines.
not to forget that we have a lot of industry in the south but the wealthy southern NIMBYs fought against renewables and transmission lines, so the renewable energy in the north was virtually sold to the south but couldnt get there so they had to run the fossil plants there. This "system service" was then paid for by the people in the north. So instead of using clean energy cheaply the people had to pay extra for shutting down plants in the north and run dirty ones in the south.
Of course creating two market zones as called for by experts was fought teeth and nails by the southern states. German federalism with the superiority complex and robbery attitude from Bavaria and Baden-Wurttenberg is a bane on the countries development.