As Germany heads for federal elections in February 2025, a spectre is haunting the country – the spectre of deindustrialisation. German industrial production is way below its 2018 peak, and started declining earlier, and faster, than in other eurozone countries. Some firms, like Volkswagen (VW), are now negotiating possible German plant closures and mass layoffs. This is not a function of shrinking global trade, as global trade continues to expand. China’s growing imbalances, to which Germany is uniquely exposed, are a more likely culprit.
Author: Sander Tordoir, chief economist, Centre For European Reform.
This article is available on the CER website.