THE GERMAN economic recession has deepened, with the number of corporate insolvencies in the country sharply increasing in July.
Almost a quarter more companies filed for insolvency than in the same month last year, according to the latest figures from the Federal Statistics Office.
This included a sharp increase in the number of larger businesses announcing they were closing down in the first half of 2023 – an increase of 12.4% compared to 2022.
The surge in companies going bust is only one of the many indicators that the German economy continues to dive over the cliff into recession.
According to the International Monetary Fund (IMF) German Gross Domestic Product (GDP – the total wealth produced by a country) will continue to contract in 2023 while inflation remains high at 6.2%.
This is a massive blow to the German government which had been confidently predicting that growth in GDP would double this year.
Last week, the Statistics Office announced that German industry production plummeted by 1.5% in June compared to May. This has led to commentators now referring to Germany as the ‘sick man of Europe’.
This is a far cry from recent years when Germany was hailed as the ‘powerhouse’ of the eurozone, an industrial and banking giant that dominated all the weaker economies of Europe and whose bankers dictated austerity measures to countries like Greece and Italy who relied on the EU to bail out their countries from economic collapse.
Germany is by far the biggest economy in the eurozone with almost 30% of the entire economic output of the bloc, but today its dominant manufacturing industry has collapsed as the world capitalist crisis has hit its exports, undermining all its industrial might.
The crisis has been accelerated by the imperialist war against Russia over the Ukraine.
All the sanctions on Russian oil and gas, along with all the financial sanctions that the imperialist nations assured the world would bring Russia to its knees and prepare the way for regime change, have backfired spectacularly and delivered a massive blow to Germany with its high dependency on Russian energy imports.
The German government has committed up to 100 billion euros to the army and NATO’s war in Ukraine while German workers have seen their wages held down below inflation, the price of food soar by over 20% and the cost of energy by over 50%.
Even before the war and all the sanctions, the working and middle class in Germany were having the capitalist crisis dumped on their backs with figures from the Statistics Office revealing that in 2021, 17 million German citizens (20.9%) were officially living in poverty.
With the complete collapse of manufacturing industry, that figure can only increase dramatically.
Germany is not the only EU country being swamped by company insolvencies and bankruptcy.
In France, the second largest economy in the eurozone, the number of companies going bust jumped by 35% in this year’s second quarter compared to the same period last year, putting 55,000 jobs at risk of disappearing.
The response of the French president Macron has been to push through increases in the pension age in a war to smash all the gains made by French workers.
Similarly in Italy, the new extreme government of Giorgia Meloni last month announced it was putting an end to benefits for thousands of families and individuals deemed ‘fit to work’ in order to drive them into low paid, insecure, casual jobs in a country with the highest unemployment rate in the EU.
The EU is collapsing into recession, with a ruling class determined to make the working class pay through mass unemployment, pay cuts and the ending of social benefits.
With the entire capitalist EU crashing into recession the time has come for the working class to put it out of its misery.
The way forward is for the working class of Germany to unite with workers across Europe by building sections of the International Committee of the Fourth International in every country to organise the strength of the working class in a general strike to bring down their own capitalist governments and go forward to a Socialist United States of Europe.