The Euroquestion #1 | Germany

This article is a part of a new series of reports called "The Euroquestion" where we explore the individual future prospects of the leading nations in the European Union, and then delve into the collective prospects of the EU as a bloc and explore its destiny.

Germany has just concluded its federal snap elections, where the centre-right Christian Democratic Union along with its sister party, the Christian Social Union of Bavaria looks set to form the incoming government under the chancellorship of Friedrich Merz. As of now, the coalition partner remains undecided, but the CDU/CSU looks to be in the driver's seat in terms of the broad governing agenda.

Today, Germany is suffering from widespread economic stagnation with its gross domestic product (GDP) contracting by 0.2% in the 2024 calendar year and by 0.3% in 2023. This is considered a recession by most economists, which does not bode well for a country claiming to be the "economic leader" of the European Union.

Germany now stands at a historic crossroads since its reunification in 1990. It faces a flurry of challenges ranging from economic to geostrategic. The return of Donald Trump to the White House has only complicated matters further. With the war raging in its backyard in Ukraine, and with the US security umbrella looking to be largely punctured by Trump's rhetoric, Germany now has to make a crucial choice in terms of its long term policy with regards to reliance on the US, but also needs to re-evaluate its own role in the European Union and its future trajectory.

Germany, once the leading industrial powerhouse of the grand European Union, now stands stagnant, with investments running dry, productivity decreasing, and being beaten by competition from the US and China, with faster more agile responsiveness to the current state of global economic affairs. It now faces the challenge of completely overhauling its approach to the handling of the economy and its geostrategic outlook, both within and outside the European Union. 

It, like many other nations dependent on the US security umbrella, finds itself relatively isolated by the radical change of tone in the current administration. Although this threat may not stick around for the longer term, many in Germany are already calling for decreased reliance on the United States and a more independent and self-reliant security policy, with some even arguing for a European Army, under EU control. 

Germans are now coming to terms with the fact that the "Wirtschaftswünder" (economic miracle) that took place under US patronage is no longer possible and that Germany needs to stand on its own two feet both economically, and strategically to ensure its own and the EU's survival as well. This is resulting in significant ripples across the German domestic political landscape, with the establishment parties losing ground to more extreme parties on both sides of the aisle.

With all these challenges plaguing the German nation, and the solutions not looking to be easy or painless, it remains to be seen how or whether the once great driver of European growth can get back in the driver's seat, and drive the EU to economic greatness once again.