Germany: A reprise of the "sick man of Europe"?
The November wave of Ipsos’ What Worries the World survey reveals an alarming three-quarters of Germans (74%) believe their nation is on a downward trajectory – just one percentage point below the highest level of pessimism we have seen since our survey began a decade ago. The multitude of crises in recent years has also seen a significant impact on Germans' overall life satisfaction: just over two-thirds (67%) describe themselves as happy, a drop of 10 points over as many years.
High energy prices push German economy into recession
Germany's longstanding political stability and robust state coffers have been rattled by recent global events, chiefly the Russian invasion of Ukraine. The sudden loss of inexpensive Russian gas has triggered skyrocketing inflation, placing energy-intensive businesses in a precarious position. Germany, as an export-oriented economy, has also felt the brunt of China's economic slowdown and a generally waning global economy. Domestic issues, such as bureaucratic inefficiencies and a critical shortage of skilled labor, have further compounded the situation. Unlike other leading industrialized nations, Germany's economy experienced a minor contraction in 2023.
An increasing proportion of German citizens are feeling the pinch of declining prosperity. One in four Germans (24%) now find it challenging to maintain financial stability, and one in three (32%) anticipate having to reduce their current standard of living. Ipsos’ Consumer Confidence Index indicates that these financial anxieties have significantly impacted German consumer behavior.
Inflation fueling social tensions
Germany's internal political dynamics are also at a critical juncture. Economic conditions, immigration, and climate change policies are currently the primary drivers of public discourse, engendering distinct partisan divides. Since assuming office in January 2022, Chancellor Olaf Scholz's approval ratings and his government's popularity have steadily dwindled, exacerbated by public displays of discord amongst the coalition partners.
The dwindling faith in political figures and democratic institutions poses an existential challenge to the government's political legitimacy and is a significant contributor to Germany's deepening political fragmentation. Many people, predominantly in Eastern German states, feel alienated and misunderstood by the self-proclaimed "Fortschrittskoalition" (progressive coalition). This sentiment is particularly evident in the public debate on climate policies, commonly perceived as an elitist project.
The widening social divide is manifesting in the growing fragmentation of the political landscape, potentially complicating future power dynamics. The recent surge in support for Germany's radical right-wing party, AfD, as indicated by poll peaks and electoral victories, suggests a political shift to the right.
Positive outlook despite economic headwinds
Despite increasing financial concerns and social discord, two-thirds of Germans (67%) express overall satisfaction with their lives. Additionally, the German labor market continues to demonstrate remarkable resilience amidst the economic downturn, and the economic projections for 2024 are optimistic. The pertinent question remains: will the forecasted economic revival align with citizens' perceptions and financial realities in a timely manner, specifically ahead of the European elections and the pivotal state elections in Eastern Germany slated for 2024?
Dr. Christoph Preuss
Country Manager, Ipsos in Germany