- Christian Lindner insists his country is not the “sick man of Europe”.
- Lindner says Germany needs economic reforms to resume its previous success
- Growth in Europe is declining because of Germany
The German economy is “tired” and needs “a good cup of coffee”, according to one of its senior ministers.
As the industrial powerhouse faces another year of recession, German Finance Minister Christian Lindner insisted that Germany is not the “sick man of Europe”.
But he added while speaking at the World Economic Forum in Davos, Switzerland: “Germany is a tired man after a short night.”
He said the country needed a “good cup of coffee” in the form of economic reforms to resume its previous success.
This recognition – after a bleak year in which Germany had the worst economic performance in the Group of Seven major industrialized countries – came at a time when European leaders said the continent must prepare itself for the return of Donald Trump to the White House.
Christine Lagarde, president of the European Central Bank, told delegates in Davos that “the best defense is offense,” and that for Europe to be ready for battle, it must be “strong at home.”
Growth in Europe is declining due to Germany, whose economy contracted by 0.3 percent last year, making it lagging behind on the global stage.
The growing possibility of Trump winning the presidential election this year, and the potential impact on the rest of the world, was a major topic at this week’s meeting of global business and political leaders in the Swiss ski resort.
His previous period in power witnessed Trump launching a devastating trade war with Europe, and imposing heavy tariffs on steel and aluminum.
The European Union responded by imposing tariffs on American products such as jeans and bourbon.
Relations have improved under his successor, Joe Biden, but European leaders are bracing for the possibility of renewed confrontation. “The best defense – if that’s the way we want to look at it – is attack,” Lagarde said. “And to attack properly, you have to be strong on your court.”
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She added that this would mean improving the functioning of the single market and ensuring that European savings flow into capital markets to finance much-needed investments in the transition to renewable energy.
Meanwhile, Lindner said Europe was “talking a lot” about Trump but needed to become less dependent on US military protection and improve its global competitiveness.
“Doing our homework is the best preparation for a potential second term for Donald Trump, and that includes our abilities to defend ourselves,” he said.
He added: “To be an attractive partner at a high level when it comes to the economic situation, and when it comes to fair burden-sharing under the roof of NATO, this is the best we can do to be in good partnership with the United States.” It doesn’t matter which department [is in power in the US] If we are attractive, if we don’t have to ask others, because we have abilities ourselves.
But Lindner said he was “concerned” that some EU politicians were following the US in trying to “back almost everything”.
“We must avoid a race for support that we cannot afford,” he said.
“He clearly has a following that many analysts have missed,” David Rubinstein, co-founder of US private equity giant Carlyle, said of Trump.
“I think people should realize that he is a serious political force and they should not ignore the fact that he could be elected again, even though a lot of people in Europe, where we are now, are not actually his biggest fans.”
Rubinstein warned that trade relations were likely to remain frosty whoever wins the election.
“The word trade in the United States, or trade agreements, is almost a curse word now,” he added.
“Trade is often viewed by some constituencies in the United States as favoring jobs abroad and is very unpopular.”
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