Angela merkel leaves behind a mixed economic record. Germany is economically strong, however has some capturing up zu do on issues an important to die future. An analysis in graphics.

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It has actually been almost twenty years since Germany was considered die «sick man of Europe,» v high unemployment rates und chronically weak growth. Punkt that time, Hans-Werner Sinn, head von the Ifo Institute und one of Germany"s most prominent economists, famously wondered: «Can Germany ausblüten be saved?»

And then an 2005, 16 year ago, angela Merkel take it over die chancellorship. Bei the intervening years, die economic situation has essentially changed. Bei the years prior to the coronavirus crisis, Germany was running budgetary surpluses, and unemployment today zu sein less than für hilfe of what it was in 2005.

Yet while die country"s crucial economic indicators have been strong bei recent years, Germany has actually a less stellar record in areas crucial kommen sie future sustainability, such together digitalization und climate policy. Moreover, Germany’s competitiveness relative kommen sie other countries has not shown appreciable gains during Merkel"s time an government.


Employment, growth und finances

After die waning von the financial crisis an 2010, ns German economic climate experienced a «golden decade,» growing punkt a rate von several percent every year. In recent years, this growth has actually slowed. During the coronavirus crisis, however, the German economy’s decline was somewhat much more moderate 보다 that seen in other major European countries.

In terms des unemployment, Germany performs much better than many countries bei Europe. Ns unemployment rate has been cut an half since 2010. Kommen sie be sure, the labor market throughout the merkel years also benefited from ns reforms introduced von her predecessor, gerhard Schröder. However it has actually proven robust even during the coronavirus crisis, hinweisen least for this reason far.

The solid demand zum labor has been clearly reflected bei wages. Average income has risen steadily during Merkel"s time in office. Although that has notfall yet reached the level seen bei smaller nations such together Switzerland or ns Netherlands, that has jetzt risen zu a allude significantly above ns OECD average.

Overall, Germany has actually been soundly managed, generating respectable budget surpluses during the years des the financial boom. Previous Finance Minister wolfgang Schäuble"s «black zero» or well balanced federal budget plan policy, paired with die «debt brake» that sets a preferably level von permissible borrowing, has actually apparently paid off – although Germany"s budget deshalb benefited substantially from effervescent tax revenues and low interest rates.

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Research, digitalization und climate policy

In terms von research and development spending, Germany has made solid gains during the merkel era. It today meets ns target introduced by the europe Union, i beg your pardon calls zum spending an ext than 3% des GDP top top this area. Bei principle, therefore, Germany should be fine equipped zum future tasks.

Germany is deshalb comparatively well placed an terms von patent applications, which reflect the results von applied research und development work. The number of patent applications zu sein growing hinweisen a slower rate than R&D spending, und has undoubtedly stagnated. However, top top a von capita basis, die country ausblüten files international patents punkt a rate twice that von the eu average.

The EU-27 gruppe does notfall include ns U.K., which has left die EU.Source: OECD, author"s calculations

Biontech’s fast development des a coronavirus vaccine has gezeigt that plenty of German providers are still world leaders an the advance of new technologies.

However, the wagen industry accounted weil das about 37% of corporate R&D spending an 2017. The share has actually increased von seven percent points because 2009. Other sectors have therefore enhanced their spending zu a viel lesser extent.

In ns area von digitalization, political leaders were late bei identifying the need zum action. Germany ist considered a latecomer in this arena, und usually wenn into only die middle ranks bei international comparisons.

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The europe Commission, for example, produces a comprehensive index that measures ns extent kommen sie which broadband access zu sein available, the prevalence des IT skills within die population, and the degree zu which companies and government administrations have digitalized their operations. In 2020, Germany trailed the leaders somewhat in 12th place, but ausblüten ranked slightly over the europäische union average.