Germany: Troubling New Economic Data
Scholz promises to raise military spending to 2% of GDP
In April 2024, the number of bankrupt companies in Germany reached a record high for the third consecutive month. Compared to the results of February, the number of company bankruptcies increased by another 5 percent. Such data was published by the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association (IWH). In April alone, 1367 German companies closed down and declared themselves insolvent. Moreover, as IWH researchers emphasize, the number of jobs being eliminated is “extremely high.” This is why the bankruptcy case of the historic Galeria Karstadt Kaufhof shopping center chain was filed on April 1. In addition, an avalanche of bankruptcies in the construction sector has led to layoffs of more than 2000 people.
Robert Feiger, president of the German construction union (Ig Bau), announced on May 7 that a wave of strikes would paralyze construction sites across Germany. “We will not allow ourselves to be cornered as beggars. We will announce in a timely manner how and where we will strike, and it will happen quickly,” Feiger said. The announcement of the protests came after collective negotiations in the construction sector failed a few days ago because of employers’ associations (ZDB and HDB). “Employers have rejected the last chance to reach an agreement. Now we will be pushing for something more than the proposals we have already put forward. Now we are talking about asking for about 500 euros more per month for at least twelve months,” Feiger said.
And despite growing economic and social problems, Chancellor Olaf Scholz stands firm and announces that Germany will spend 2% of its gross domestic product on defense. In other words, Berlin’s military spending would have to rise from the current 52 billion to at least 81.6 billion euros per year. However, according to German newspapers, “it is not at all clear where the money will come from in the future, when the 100-billion-euro special fund for the German army will be exhausted by 2027 at the latest.”
To download the IWH report (in German) from the Pluralia website, please follow the link
