Germany: Financial Crisis Poses Extraordinary Challenges to the Country

As the German parliament prepares for a vote of confidence in Chancellor Olaf Scholz on Monday afternoon (December 16), the most important points of the election programs that German political parties will present to Ukraine in the parliamentary elections on February 23 are outlined.

In its election program, the German Social Democratic Party (SPD) “categorically rejects the delivery of Taurus cruise missiles to Ukraine.” In this regard, the SPD supports the decision of its leader and Chancellor Scholz not to supply Taurus missiles to Ukraine because Germany and NATO as a whole “cannot become belligerents themselves.” According to the SPD’s draft election program, “Ukraine should be able to conduct possible negotiations on a peace plan with Russia,” says the program, which party members are expected to vote on Tuesday, December 17.

Meanwhile, not only the political, but above all the economic future of Germany looks bleak: according to the German Federal Court of Audit (Bundesrechnungshof), “the serious situation of the federal finances in the country will present the new government with extraordinary and difficult challenges.” Regardless of the outcome of the elections, the new government will have an extremely limited budget at its disposal: “The worsening structural weaknesses of the past face new challenges,” the Court of Audit analysts wrote in their latest report, published December 16, which found that “debts have risen enormously, and interest rates have increased, while this situation will leave the new German government with limited room for maneuver.” The federal government’s debt is approaching 1,900 billion euros, while the country “lacks convincing concepts to finance important future issues such as defense and climate protection.”

According to a recent opinion poll, conducted by the Institute for Economic Research (IFO Institute), only 13% of German companies believe that business will be better next year. 31% of industry leaders believe their situation will worsen, while the majority, 56%, predict business will see no change.

“Companies currently see no signs of economic recovery as the economy has already performed poorly in 2024. These figures are worrying, and no sector is genuinely optimistic about 2025. The new federal government has a lot of work to do,” said Klaus Wohlrabe (pictured), head of polling at the institution.