Reaction To Germany is in Big Trouble

Added: 2026-05-28

[00:00:00]One of my viewers asked me if I would watch this video. It's called Germany is in big trouble. So yeah, not too sure what this relates to. Uh but yeah, I guess we can watch and you can tell me what you think about it. Is Germany in big trouble? I've not heard anything. So uh yeah, let's check this out and see what it's all about.

[00:00:20]>> VW intends to close at least three plants in Germany.

[00:00:24]>> Germany has a huge problem. Germany's under pressure and Volkswagen workers are are striking hard.

[00:00:29]>> Europe's largest economy has stagnated with no real growth in 5 years. Since 2019, they lost 272,000 jobs in its industrial sector, which accounts for nearly 5% of all jobs. The car industry is hardest hit, losing 10,000 jobs per month. And this fits into a broader picture of stagnating economic growth.

[00:00:49]But these last couple of years were particularly troubling. During three out of the last six years, their economy contracted, giving Germany the slowest economic growth of all G7 countries was why >> Porsche's profits have plunged by 95%.

[00:01:05]>> German industries are top of the line.

[00:01:07]For decades, Germany field growth across Europe. So why is Europe's strongest economy now struggling to keep up? This is Germany's economic nightmare with hindsight. H yeah, this should be interesting to learn. That's not something I knew about. I I read a little bit about Volkswagen sales going down because they weren't doing so well in China. I know that maybe 10, 15 years ago or something. They invested a lot and uh focus a lot in China and trying to grow sales there. But obviously now what we see in China is they're just got a very high adoption of electric vehicles, domestic vehicles like BYD, Cherry, all these different Chinese brands that are a lot more popular in China. Now I guess looking at the west, I I see a lot more people uh go going to electric vehicles, but also starting to buy Chinese vehicles as well. So maybe that's what's causing.

[00:02:09]But the one there about Volkswagen workers going on strike. Never heard of that. And the Porsche profits dropping so much as well. What was the cause of that? I thought Porsche would be the sort of brand that could remain steady because it's in that more premium luxury range.

[00:02:26]>> Germany once the beacon of European physical. So yeah, again like with Germany because it has like such a strong uh car industry, it it did at least uh I guess if that's hit, it could cause a bigger problem to the overall German economy >> is struggling.

[00:02:45]>> So across Europe and Western countries, we're seeing that same trend where rent, food, and energy prices have all surged while wages have struggled to keep up.

[00:02:55]But in Germany these last couple of years they were particularly hard-hitten. Real wages have barely grown over the past decade and in the past 5 years they have actually fallen.

[00:03:05]They are now roughly back to their 2021 level. Germany's economic model delivered decades of prosperity but it was built for a different world.

[00:03:13]>> Yeah. Tell me what you think about that.

[00:03:15]How's that affecting you? Like that's pretty mad that it's actually going backwards. It's similar in the UK.

[00:03:21]I left the UK, I mean like probably roughly about 15 years ago. And it seems like everything just stayed the same since then. Wages were stagnant. There's just no innovation in government or industry. Everything's just pl pl pl pl pl pl pl pl pl pl pl pl pl pl pl pl pl pl pl pl plateaued since then.

[00:03:39]The political situation obviously is just very uh divi divided and no one's really working for the better of the country. I don't know if that's similar in Germany. Uh, but to see that the wages have actually went backwards, that's pretty mad.

[00:03:55]How's that affected you?

[00:03:56]>> After Russia's invasion of Ukraine, the war in Iran, and rising tensions with China, that model is now under pressure, and they may need to change.

[00:04:04]>> That economic structure was built much more recently than you might expect.

[00:04:09]When East and West Germany reunited in 1990, it brought together two vastly different economies. West Germany's productivity was over $25,000 per person, which is more than twice that of East Germany, who had one of the least productive economies in Europe. Their economy was dominated by the public sector. Private companies accounted for just under 3% of all economic activity compared to 85% in the West. The two regions differed greatly in every imaginable way from unemployment to exports. And after reunification, one of the first gaps that they sought to bridge were wages.

[00:04:45]>> The removal of the wall and unity all in one. A day in which Germany became one country again.

[00:04:52]>> Wages in East Germany were around 70% lower than in the West. And that kind of income inequality had to be evened out.

[00:05:00]They increased the wages of East German workers. But there was a trade-off.

[00:05:04]Germany was trying to integrate its economy into global markets and suddenly having much higher labor costs meant that East German exports became less competitive. The 1990s were painful.

[00:05:16]Growth stopped, unemployment rose, and Germany was once again labeled the Sigman of Europe. But beneath the service, they were laying the foundations for a remarkable comeback.

[00:05:27]The Asian giant has now grown into one of the most important export markets for manufacturers from all over the world.

[00:05:34]China's industrial boom suddenly created huge demand. Germany started producing more cars, machinery, and chemicals for export. After German reunification, trade accounted for 40% of their GDP, and this reached a peak of 89% in the early 2020s. And usually what happens when a country gets richer is that its industrial sector shrinks as factories make way for services. And this is in part because the cost of labor increases as a country gets richer. But Germany had another advantage to keep their production affordable. Before reunification, Germany had made a deal with Russia that became known as pipes for gas. West German companies supplied steel pipes and financing to build pipelines that would carry natural gas from Russian producer zones into central Europe and Germany became a key transit and consumption hub. This legacy gave United Germany cheap access to energy.

[00:06:28]It is much cheaper to import gas through a pipeline than by boat. Germany had the infrastructure and Russia was a steady and reliable supplier. They built even more pipelines in the early 2000s and they doubled down on this approach even when relations with Russia became more difficult. The German >> Yeah. Like do you think that was a bad mistake? I mean it seems like it was doubling down and then when there's tensions with Russia like is is it just would they just become too dependent on Russia for that? And uh yeah, obviously I've seen that in the last couple years Germany was shutting down a lot of its nuclear power plants and things like that as well.

[00:07:09]Why is that is that a is that a bad mistake in hindsight or what?

[00:07:13]>> The philosophy to foreign policy was to strengthen economic ties with potential adversaries like Russia and China, hoping that integration would encourage stability and cooperation. The German economy was now a key driver of growth in Europe. This was built on increasing demand from China, cheap energy from Russia, and predictable global trade.

[00:07:34]>> Is like predictable global trade kind of is that not like kind of a bit of a contradiction compared to strengthening ties with China and Russia. These are two countries that I would say are probably two of the most unpredictable countries when it comes to trade. like if you're putting more uh dependency on these two countries of every country that you could that doesn't really make sense with the third part.

[00:08:06]>> And can you already see where this went wrong? So just quickly before we continue with the video I want to thank today's sponsor. Do you ever receive emails like these sketchy offers news?

[00:08:17]The German economy was built around trade. Their strength comes from worldclass manufacturing especially in cars and machinery. disciplined wages and a deep integration into global trade. But this rests on three pillars that around 2019 all started to crack beginning with the pandemic. CO 19 has strained Europe's largest economy and experts say that Germany will see it >> see this as well right like if they're saying that I feel like blaming the p pandemic for that would be not the like not it's not very truthful in the fact that the thing with what's going on with Russia and Ukraine that it's not as if that really just started a couple years ago that was like 2014 that there was already um uh invading Russia and trying to take Crimea and whatever it is like and surely people should have been thinking at that time, okay, we actually need to try and lower our dependency on energy from Russia rather than strengthening it or being more dependent or what like >> economic output shrink dramatically. A unique characteristic of the German economy is that the industrial sector remained a large part of its economy when the country grew richer. In 2020, this made up 20% of Germany's economy and that's roughly double that of the UK or France. But the pandemic exposed how dependent the sector had become on international supply chains. Global demand initially collapsed and the industrial sector lost momentum. CO pandemic has snarled global supply chains causing massive backlogs and shortages that have some companies stockpiling goods and trailers and chartering private container ships.

[00:09:59]>> That's when Russia invaded Ukraine. In the past, Germany had responded to conflict with Russia by deepening economic ties. After Russia's annexation of Crimea, they doubled down on this approach and they substantially increased Russian imports of natural gas. And this see the thing like it's uh Yeah.

[00:10:20]Is that the way to kind of is that what to do? Is that the best thing to do?

[00:10:24]Like in that time it's before the pandemic and you want to after this you want to strengthen ties with Russia like it goes against kind of what the EU always says about how they want to be harder on Russia and this and that is like actually behind the scenes were not really following what >> Germany was already phasing out its own nuclear power plants and they were reducing its use of coal. Russian gas was still the cheapest and the most reliable source of energy. And this was hugely beneficial for Germany's industrial base. But after Russia's full-scale invasion of Ukraine, they shifted gears and they completely stopped importing Russian gas through these pipelines. And this had a tremendous ripple effect across the economy. Prices had been rising in Germany and across Europe. The latest data puts inflation in Europe's biggest economy at 5% yearonear, the highest in 30 years. The demand for German cars and machines from abroad has dropped.

[00:11:21]>> Cheap Russian energy imports was one of the main >> the sort of thing is like for China and Russia, it's like if they had a plan to destabilize Europe or to hurt these countries that they might see as competitors in the long term.

[00:11:39]This is pretty much what you would do.

[00:11:41]Like it it's very like a very simple plan is like you go and get so much trade from Germany or whatever whatever other country for China you increase their their dependence on you dependence on you dependency on you from Russia's point of view you're basically holding all this power over these countries and Germany in this instance and like you can basically just take that away at any time you want if they both do it at the same time then yeah it's I mean that Surely like it's not that difficult to see.

[00:12:14]>> Structural advantages of the German economy and it has suddenly become one of its main structural weaknesses. But around the same time, another pillar of the foundation of Germany's economy started cracking.

[00:12:25]>> China's economy is slowing down and already ripple effects are showing up around the globe.

[00:12:30]>> China's economic growth started to slow.

[00:12:33]This had been a key driver of growth during Germany's golden years in the early 2000s. because Germany lost nearly $10 billion worth of trade in the 2 years after peak trade in 2022. This was a wakeup call. The world was changing.

[00:12:47]Global demand was shifting and political alliances were being tested. Germany needed global markets to be stable and predictable. And the last thing that they could use at this moment was something or someone to test alliances further. The European Union charges us more than 10% tariffs and they have 20% VATS much much higher. And for these reasons, starting tomorrow, the United States will implement reciprocal tariffs on other nations.

[00:13:15]>> China is the fourth largest buyer of German exports, but the single largest is the United States. Trump's tariffs in his second term hit all German industries, but particularly metals and motor vehicles. But Trump's trade war with China affected Germany in some other surprising ways.

[00:13:32]>> US tariffs on China are now in effect.

[00:13:35]>> We're putting a 50% tariff on above the tariffs that we put on.

[00:13:40]>> China began speeding up its transition to reduce dependence on countries that align with the United States. They strategically began scaling down imports from Germany and they absolutely killed it with their own car production. Their global market share of car production increased from three and a half to 34% over the same time that Germany's market share dropped from 10% to 4%.

[00:14:03]>> And this one as well is like yeah they can blame us for making China want to become less dependent on other countries and increase their own. But I mean even something like this you can see like China's always did this sort of thing whether it's like in the UK for instance it's steel was a like a big industry but China just produces things very cheap and then exports it to other countries. It hurts their own domestic markets until uh yeah until they have no industry left.

[00:14:38]like this is the one that it's like now they just produce these like cheap cars that people want to buy. Like especially with this cost of living uh these cost of living problems that everybody's been having for the last decade or longer then they have a cheaper alternative. Like most people are just price conscious. That's all they want to worry about is paying cheaper for things. So they can just offer this export it everywhere. in Germany having such a strong car industry, it's just going to hurt them where before Germany was trying to like provide cars to them.

[00:15:13]>> This was a huge deal for Germany. Didn't they see that one of its biggest industries was losing demand, but it was now facing more competition? In Germany, the automotive industry is more than just an economic sector. It's part of their national identity. The same is true for advanced manufacturing. These industries represent engineering precision, export strength, and a long-standing belief in German excellence. As they come under pressure is not just an economic shift. It becomes a psychological one. At a time when debates over immigration, demographic decline, and the future are intensifying. This erosion adds to a growing sense of uncertainty. Germany once saw itself as the economic engine of Europe. But today, that confidence is giving way to our more uneasy question.

[00:15:59]Where is the country heading?

[00:16:01]>> Ford Motor Company has plans to cut 4,000 jobs. About 3,000 of the layoffs will happen in Germany.

[00:16:07]>> The VW Group has reported a third quarter loss of more than a billion euros.

[00:16:13]>> Despite all these negative developments and the fact that Germany is currently going through a difficult economic phase, they still have huge industries.

[00:16:20]Take BASF, the world's largest chemical producer. It is headquartered in Germany and they employ over 100,000 people.

[00:16:28]Their annual revenue is in the tens of billions of euros and even still this only makes them the 10th largest company in Germany where sectors like industrial energy and particularly automotive dominate. Their largest company Volkswagen accounts by itself for more than 7% of Germany's total economic output. It is all relative and Germany's economy is by no means on the verge of collapse but they have been particularly hard hit by crisis such as the pandemic and the war in Ukraine. And the reason for this is because of how their economy is structured. They hit Germany where it hurt them the most. And the result is that consumer prices have increased faster than any time since recording began in 1956. And that is huge. But crisis like these don't just expose weakness, they force change. Germany has been here before. In the 1990s, they were written off as the sigman of Europe. Yet within a decade they rebuilt their competitiveness and they became one of the world's strongest export economies. The challenge today is that cheap energy is gone and global demand has become less reliable. Trade has become politicized and competition is no longer about quality but about scale, speed and technological leadership.

[00:17:40]Germany faces a choice. It can try to preserve the model that made it successful in previous decades. or they can adapt to a world that looks very different from the one that it was built in. Power dynamics are shifting, alliances redefining. They need to rethink their energy policy, perhaps by going nuclear again. They can invest more aggressively in new industries.

[00:18:00]They must redefine what German economic strength looks like in the 21st century.

[00:18:05]The success of Germany over the next couple of years will depend on how fast it can reinvent itself to keep up. How they respond to this shift will not just define its economy but its role in Europe and the world.

[00:18:20]>> Yeah, tell me what you think. Can it can they do that? I'm sure they can like uh yeah, economies go up and down. I guess it's just down at the moment, but still uh time to turn that around for sure.

[00:18:34]What do you think Germany can do to reinvigorate its economy or its automotive industry?

[00:18:41]Can they compete with these Chinese cars? Like I don't know, they could like create like just a cheap uh electric vehicle that kind of cuts out all these companies like BYD and stuff like that as well. Uh but yeah, an interesting documentary. Tell me what you think.

[00:18:58]Thanks.