THE CRISIS gripping the German economy threatens not just to bring the country down but will complete the crash of the entire eurozone, a leading banker has warned.
This week Christian Sewing, chief executive of the German Deutsche Bank, issued a dire warning about the massive increase of ‘zombie’ companies that threatens to drag down Europe’s biggest economy and bring down the rest of the eurozone nations with it.
Zombie companies are those that exist entirely on massive debt – unable to produce enough profit to pay even the interest on these debts, they rely entirely on borrowing even more just to keep solvent.
One in six German companies exists entirely on debt and government bail-outs and the banks are now warning they will collapse shortly, precipitating a wave of mass unemployment.
With the onset of the coronavirus pandemic, governments throughout Europe and Britain joined in a massive rescue attempt to prevent entire industries and companies from collapsing.
Bail-outs to companies worth billions of euros were handed out in Germany and across the EU in a desperate attempt to prevent a massive economic crash.
In a desperate effort to prevent a wave of corporate bankruptcies, the German government in May suspended insolvency rules so that companies didn’t have to officially register insolvency. This temporary measure has now been extended until the end of the year.
The big fear of Deutsche Bank is that none of the measures, including pumping over one trillion euros to keep the zombies going, will prevent a collapse and a nationwide massacre of companies and jobs in the EU economic ‘powerhouse’.
The same picture dominates in the EU’s second largest economy, France. This week, president Emmanuel Macron announced plans to hand out a further 100 billion euros to companies and pledged to keep pushing through his ‘pro-business reform’ agenda.
France is ploughing more government money as a percentage of GDP on keeping capitalism going than any other large European country after its economy contracted by 11% – the biggest drop since the Second World War.
The French government has already handed out 8 billion euros to the car industry and 15 billion into the transport and aeronautical industry, including 7 billion for Air France while the tourism sector has been promised 18 billion. None of this money has protected the jobs of workers and young people. Unemployment in France is set to increase by one million raising the unemployment rate to 12.5%, a record high.
Meanwhile, the French public debt has soared to over 120% of the country’s GDP meaning that, in common with Britain and the rest of Europe, France is essentially bankrupt.
The French working class will be under no illusions about what Macron means when he promises a programme of pro-business reforms. From the start of his presidency, Macron has attempted to drive through attacks on the wages and conditions of workers to rescue French capitalism.
This will gain even more urgency as France and the entire capitalist EU sinks under the weight of debt that the bosses and bankers are determined will be paid for by the working class.
French workers and youth rose up against Macron’s earlier attacks, with the Yellow Vest movement spreading across the country and winning support throughout the workers of Europe and Britain.
This movement will be eclipsed by the revolutionary upsurge as millions of workers across Europe rise up against millions being thrown out of work while billions are spent to ensure the profits of the capitalist class.
They will be joined by the working class and youth in Britain who face the same enemy – a capitalist system that can only offer mass unemployment, wage cuts and poverty.
This crisis is revolutionising the working class across Europe and Britain, determined not to be brought down along with a collapsing capitalist system.
The immediate issue before the working class today is to put an end to both the EU and British capitalism by seizing power and going forward to socialism.
This requires the building of revolutionary sections of the Fourth International in every country to lead the socialist revolution, uniting the working class in the common struggle for the United Socialist States of Europe.