Germany reaching its zenith

By nature I'm an optimist, but when it comes to the German economy I find it increasingly hard to preserve my optimism. In this piece published in Børsen I have listed a number of alarm signals that in my view precipitate an economic slowdown:

1. The Volkswagen scandal: not only is VW so big that its problems have a direct bearing on the German economy, not least via the effect on suppliers and service providers. The "dieselgate" scandal also tarnishes the reputation of "Made in Germany" more generally.

2. Refugee crisis. As much as I sympathise with chancellor Merkel's humanitarian stance, it will inevitably be very costly for Germany. The optimistic view is that the influx of refugees will help mitigate the effects of the ageing German society, but before the positive effects materialise there will be a huge financial burden to bear for at least the next decade.

3. Energy transition - "Energiewende". It was a heroic decision to phase out nuclear power by 2022, but that will also prove to be extremely expensive.

4. Reform clog. Since Gerhard Schröder's Agenda 2010 ten years ago no major reforms have been adopted in Germany, except for the decision to lower the pension age for some wage earners, which is another laudable but costly initiative.

5. Debt crisis. The Greek crisis has not only been a financial drag, it's persistence is also taking a toll on the general investment climate across Europe.

6. Slowdown in emerging markets. Adding to all this is - at least in the short term - a significant weakening in demand from China, Russia, Brazil and other large emerging markets.

Altogether: the prospects for the German economy are not bright. Danish readers can read the full article here: bit.ly/1WOA4E0