The rapid deindustrialization of Germany continues to gain momentum. The word “de-industrialization” has also arrived in the mainstream media, but they perceive it as a natural event that – like an earthquake – cannot be prevented can, deindustrialization is a direct consequence of the federal government's policy.
Number of corporate bankruptcies increased by over 20%
As the credit agency Creditreform reported at the beginning of December, there were 18,100 corporate bankruptcies this year. This is an increase of 23.5 percent compared to the previous year. The number of bankruptcies rose by 20.8 percent in the construction industry, by 22.5 percent in the services sector, by 26 percent in trade and by as much as 30.2 percent in the manufacturing sector.
With around 80 percent of bankruptcies, small companies with fewer than ten employees are affected the most. However, their share in previous years was even higher. As a result, the number of insolvencies of medium-sized and large companies has risen massively. For companies with more than 250 employees, for example, the number of bankruptcies rose from 60 to 90. For companies with 11 to 50 employees, the number has increased by 50 percent to almost 2,500. For companies with 51 to 250 employees, the increase was almost 76 percent. 650 such companies have gone bankrupt.
Creditreform expects numerous further bankruptcies in 2024. It is considered “entirely realistic” that the number of bankruptcies could be around 20,000 in 2024.
The construction industry is on its knees
There is a massive housing shortage in Germany and the federal government has not considered it necessary to do anything about it for years. Even if the federal government's plan were implemented and 400,000 new apartments were built per year during this electoral period (i.e. until 2025), that would only be a drop in the ocean, because Germany is currently lacking 700,000 Rental apartments for low earners. And as the number of refugees increases, the housing shortage continues to grow rapidly.
How poorly the German governments have worked in recent years is made clear by some figures reported by the Tagesschau in January. In the 1990s there were around three million social housing units in Germany; today there are only 1.1 million. The federal government wanted to create 100,000 new social housing units in 2022, but at the end of the year there were 27,000 fewer social housing units in Germany than in 2021.
And there is no improvement in sight, because a few days ago it was reported that the construction industry is continuing to go downhill. Der Spiegel wrote about this under the headline “Hardly any orders for apartments – construction industry fears loss of 30,000 jobs”:
“As expected, the toxic mix of sharply increased construction and financing costs has left its mark, especially in residential construction,” said the ZDB. This year, only 271,000 residential units are expected to be built. “The downward spiral continues,” said Schubert-Raab. “Based on current investment conditions, we only expect 235,000 residential units to be completed by 2024.” This means that the federal government’s goal of 400,000 new apartments per year is becoming a long way off.”
For comparison: In Russia, which is supposedly so poor and has been terribly weakened by Western sanctions, 1.2 million new apartments are built every year.
“Economic paralysis”
At the beginning of December, Der Spiegel reported on a survey by the Institute of the German Economy reports that only 23 percent of German companies are positive about 2024, while 35 percent have negative expectations. The main reason for this is the sharp increase in energy prices, although of course it is said that the reason for this is the “Russian invasion of Ukraine”.
Both Spiegel and the German Economic Institute fail to mention that energy prices have exploded because Berlin and Brussels no longer want to buy cheap Russian oil and gas, but instead rely on more expensive LNG from the USA. One can find Russia's actions bad, but Russia is not to blame for the skyrocketing energy prices; they are a consequence of the decisions made in Berlin and Brussels.
And these decisions are driving the deindustrialization of Germany ever faster. The Greens will be happy because a deindustrialized Germany will emit less CO2.