Years from now, experts will sit pondering what Europe’s politicians were thinking when they signed on to this bizarre collective economic suicide pact.
The lethal combination of of anti-Russia sanctions (ordered by Washington) which have choked off the previous supply of cheap and reliable natural gas to power the modern European economy – have now permanently handicapped the first world economy. Add to this, the endless raft of counter-intuitive ‘green’ and ‘net zero’ energy policies which have created an energy deficit in modern Europe. All of these naturally results have resulted in a completely avoidable, artificial economic crisis in Europe.
When key anchor industries like BASF leave, then it will naturally lead to a host of other dependant industries disappearing after it. That’s just common sense.
But common sense seems to be the one commodities which is in fatally short supply these days in Euroland.
Here’s how it went down…
Politico Europe reports…
Germany’s biggest companies are ditching the fatherland.
Chemical giant BASF has been a pillar of German business for more than 150 years, underpinning the country’s industrial rise with a steady stream of innovation that helped make “Made in Germany” the envy of the world.
But its latest moonshot — a $10 billion investment in a state-of-the-art complex the company claims will be the gold standard for sustainable production — isn’t going up in Germany. Instead, it’s being erected 9,000 kilometers away in China.
Even as it chases the future in Asia, BASF, founded on the banks of the Rhine in 1865 as the Badische Anilin- & Sodafabrik, is scaling back in Germany. In February, the company announced the shutdown of a fertilizer plant in its hometown of Ludwigshafen and other facilities, which led to about 2,600 job cuts.
“We are increasingly worried about our home market,” BASF Chief Executive Martin Brudermüller told shareholders in April, noting that the company lost €130 million in Germany last year. “Profitability is no longer anywhere near where it should be.”
Such malaise now pervades the whole of the German economy, which slipped into a recession in the first quarter amid a flurry of surveys showing that both companies and consumers are deeply skeptical about the future.
That concern is well founded. Nearly 20 years ago, Germany overcame its reputation as the “sick man of Europe” with a package of ambitious labor market reforms that unshackled its industrial potential and ushered in a sustained period of prosperity, driven in particular by strong demand for its machinery and cars from China. While Germany frustrated many partners by exporting vastly more than it was buying, its economy flourished.
The boom times, however, came with a cost: The economic strength lulled its leaders into a false sense of security. Their failure to pursue further reforms is now coming back to bite.
Suddenly, a perfect storm is brewing over the former European powerhouse, signaling that its current recession isn’t just “technical,” as policymakers pray, but rather a harbinger of a fundamental reversal in economic fortunes that threatens to send tremors across Europe, injecting even more upheaval into the Continent’s already polarized political landscape.
Confronted by a toxic cocktail of high energy costs, worker shortages and reams of red tape, many of Germany’s biggest companies — from giants like Volkswagen and Siemens to a host of lesser-known, smaller ones — are experiencing a rude awakening and scrambling for greener pastures in North America and Asia.
Absent an unexpected turnaround, it’s hard to avoid the conclusion that Germany is headed for a much deeper economic decline.
The reports from the front lines are only getting worse. Unemployment rose year-on-year by about 200,000 in June, a month when companies normally add jobs. Though the overall unemployment rate remains low at 5.7 percent and the number of job vacancies high at nearly 800,000, German officials are bracing for more bad news.
“We’re beginning to feel the difficult economic conditions in the labor market,” German labor office head Andrea Nahles said. “Unemployment is rising and employment growth is losing momentum”…
Continue this story at Politico Europe
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