Olaf Scholz is under mounting pressure as the country’s economy shrinks for a second year in a row. (Image: Getty)
The has been left humiliated as the economy of , once Europe’s powerhouse, has shrunk for the second year in a row, with the threat of a winter recession looming.
The contracted by 0.2% in 2024, following a 0.3% dip in the previous year, new figures from the German statistics office have revealed. In the last three months of the year, it shrank by a worrying 0.1%.
This marks the first time since the early 2000s that the economy – the largest in – has suffered a two-year contraction.
This news threatens Chancellor ahead of next month’s snap election, which was called after he lost a vote of no confidence before Christmas.
Carsten Brzeski, Chief Economist of ING Germany, has claimed that Germany is once again the “sick man of Europe”, according to .
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In September, Volkswagen was considering closing domestic plants for the first time. (Image: Getty)
The economy has suffered greatly due to, among other reasons, surging energy prices amid the war in .
In September, it was revealed that carmaker was considering closing domestic plants for the first time. This was shortly followed by chipmaker Intel’s decision to suspend plans to build a 30 billion euro (£25.3 billion) plant in Germany.
Economists have also warned that the country is sliding into a winter , with high energy costs, increasing inflation and steep drops in factory activity levels in November 2024.
The news also comes as concerns grow around President-elect ’s threat of imposing tariffs on all US imports, which could worsen the situation.
According to Timo Wollmershäuser, of the in Munich, “Germany is going through by far the longest phase of stagnation in post-war history. It is also falling behind considerably in an international comparison.”
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The incumbent chancellor’s party is set to receive 15% of votes while the CDP leads with 31%. (Image: Getty)
The Institute warns that without economic policy reforms, Germany is “hardly likely to break free from stagnation this year” and expects “barely perceptible growth of 0.4%”.
The economy, along with immigration, are among the top issues for German voters going into the , which was triggered by a no-confidence vote in Scholz after the collapse of his three-party coalition.
According to Politico, the incumbent chancellor’s Social Democratic Party is set to receive only 15% of the votes, while the far-right Alternative for Germany (AfD) is expected to gain 21%.
The centre-right bloc – which includes s old party, the Christian Democratic Union – has a comfortable lead of 31%.
Brzeski warned: “The outlook for German industry remains anything but rosy. The upcoming elections will be key for Germany’s economic outlook in 2025 and beyond.”