EU cracks showing as Merkel faces ‘economic decline and approval ratings in free fall’ | World | NewsFebruary 16, 2021
Some 80 percent of voters were pleased with German Chancellor Angela Merkel‘s management of the coronavirus crisis, according to a poll by broadcaster ZDF’s Forschungsgruppe Wahlen published in June. However, the sluggish start to the EU’s vaccination campaign and the second wave of infections is now causing havoc in Germany. Chief economist at the Centre for European Reform Christian Odendahl recently wrote on Twitter, attaching a picture of a survey by Frankfurter Allgemeine Zeitung: “Approval rating of Merkel‘s government is in free fall, on the back of the vaccine disaster and mishandling of the second wave.”
The graph shows that only 49 percent of voters now believe Mrs Merkel’s government is doing a good job at handling the crisis.
On the other hand, 42 percent of voters are critical – up from 15 percent in August.
Mr Odendahl added: “This is not bad news just for Jens Spahn [the German Health Minister].
“The state Prime Ministers are in charge of the lockdowns etc, so Laschet, Söder et al equally under fire.”
The poll is not the only thing Mrs Merkel has to worry about, though, as a recent survey published by FAZ reveals German companies spent 2.2 percent less on innovation last year than in 2019.
According to the head of Oxford-based think-tank Euro Intelligence Wolfgang Munchau, this report is significant as spending on innovation is a barometer for future productivity growth.
He explained: “FAZ says one of the factors is Brexit, which has added to the uncertainties of the pandemic. Another factor – which is not reflected in the data – is a reduced efficiency of the investments.
“ZEW, which conducted the survey for the federal education ministry, produced a metric that ranks successful innovations relative to turnover. There are no data available for 2020, but the metric already showed a 6.4 percent decline in 2019.
“The reason for this is increased global competition. Our suspicion is that the growing gap in digital infrastructure is a factor.
“What the ZEW data show is that large companies kept investing. Virtually all of the decline is due to small and medium sized companies, where investments in innovation fell by nine percent.”
Mr Munchau noted the rise in innovation investments from 2.4 percent of GDP in 2005 to 3.1 percent in 2019 was one of the engines behind Germany’s strong economic performance.
However, one-third of that was due to the car industry alone – another indicator of Germany‘s vulnerability to that one sector.
He concluded: “Another problem is the lack of digital investments. Germany’s tendency to double down on analogue technologies, like diesel cars, and the failure to invest in digital technologies is showing through in the data.
“Just as it took a long time for the misallocation to affect investments and productivity growth, it will take a long time for catch-up investments in digital technologies to reverse.
Mr Beck noted: “But will the EU break up?
“That depends on how much German money is left.
“The EU will come under extreme strain when German money runs out.
“The German economy performed well until two, three years ago but now it is not performing that well compared to other successful economies in the world.
“Its fiscal situation is deteriorating quite fast.”