It was in the offing, now it's official: Germany has plunged into recession for the second time within a short period of time after the Corona crisis in 2020. The economy has been shrinking for half a year; Inflation, the energy crisis and interest rate hikes are taking their toll.

At the beginning of the year, it looked as if the German economy would escape the downturn. The fact that things turned out differently hurts economically. In other respects, however, it is helpful.

After the publication of the statisticians, no one can ignore the unvarnished truth: Germany has a real economic problem that cannot be muddled through. There will be no strong upswing in summer and autumn either. "Gloomy" and "no improvement in sight" comment the economic researchers.

The Germans keep their money together

Germany's recession has two dimensions – one acute and one structural. The cocktail of high inflation and rising interest rates is putting an acute strain on the economy. Because sandwiches now cost more than 3 euros and prices are skyrocketing, Germans are keeping their money together. Declining consumption is slowing down the economy. At the same time, rising interest rates are eating away at growth hopes. This is most visible in the construction industry, which is running out of orders after golden years.

The structural problems concern industry. It has coped better with the lack of Russian gas supplies than some feared. However, it now has to deal with a bundle of problems: energy remains permanently expensive, the global economy is weak, investments are more profitable elsewhere, the green transformation is only generating an economic miracle in the dreams of the Federal Chancellor, and the shortage of skilled workers is omnipresent.

These issues should be at the top of the political agenda. Heating laws are all well and good. But without a functioning economy, the fight against climate change cannot be won. So: Dare to have more economic policy!