Kebab price hikes a symptom of Germans' economic malaise

BerlinGermany, traditionally considered the economic powerhouse of the European Union, is heading into Sunday's election in a funk. Immigration (27%) and the economy (24%) are the issues that most concern Germans ahead of the election, according to a recent poll by public broadcaster ARD. One of the main challenges for the next German chancellor will be the recovery of Europe's largest economy. After two years of contraction. Germany's gross domestic product (GDP) fell by 0.3% in 2023 and 0.2% in 2024, and growth is expected to be marginal this year. The country had not seen two consecutive years of contraction for two decades, since Social Democrat Gerhard Schröder was chancellor. Germany was then considered "the sick man of Europe": in 2002 and 2003 the German economy fell by 0.2% and 0.5% respectively. This economic pessimism is palpable on the streets of the country. Germans notice it in their daily lives. Politics is suffering.

Claudia, a Berliner who prefers not to give her last name, believes that the economic situation has worsened in Germany. "We are in a recession. So I don't need to think too much. These are facts. The numbers and the insolvencies" of companies show it, she explains while walking through a shopping centre in Berlin. "The recession and inflation have an impact on citizens. Everything has become more expensive," says this Berliner who is about to retire.

Young people, on the other hand, complain about the rise in price of the döner kebab, one of the most popular street foods in Germany and which has historically been a low-cost meal. The price of the döner - thin strips of roasted meat accompanied by salad and sauce in a pita bread - has gone from costing 4 euros in 2016 to 7 euros in 2024 or even more, depending on the city and the place where it is bought. Faced with "döner inflation", the party Die Linke (The Left) even proposed a few months ago a "Doner price break", that is, limit its price.

Germans have the feeling that things used to work better in the country. The Deutsche Bahn railway company has succeeded in shattering the myth of German punctuality and efficiency. Travelling in Germany by train takes time and a lot of patience. For example, it takes 5 hours and 40 minutes to travel by ICE train from Hamburg to Munich (612 kilometres), while the Madrid-Barcelona AVE journey (620 kilometres) can be done in two and a half hours. That is, if the train is not cancelled or there are no delays, which is very common in Germany right now.

In 2024, only 62.5% of ICE and IC long-distance trains will arrive "on time" at their destination, considering a tolerance margin of six minutes, according to official data. In 2004, punctuality was 84.3%. Deutsche Bahn blames the delays on numerous construction projects on the rail network and "an outdated, error-prone and overloaded infrastructure".

The industry is in a state of disrepair

"Germany's economic weaknesses are not so much of a cyclical nature as of a structural nature," says Marcel Fratzsche, President of the German Institute for Economic Research (DIW Berlin). "Over the past eight years, industry in general, and the automotive sector in particular, have contracted and the necessary framework conditions in Germany have deteriorated further. The much-needed new infrastructure, whether for digitalisation, transport or energy, is insufficient," explains the economist.

The German automotive industry is also in a deep crisis, in the midst of a transition to electric vehicles and facing strong competition from Chinese manufacturers. "We want to continue to make the most modern and efficient cars, the most digital and also the most climate-neutral ones of the future. We must invest now to remain competitive in products on the international market," says Hildegard Müller, president of the Association of the Automotive Industry (VDA), at a meeting with the press in Berlin.

Müller would recommend that the next German chancellor "first sweep in front of the front door." "We have a problem with energy policy, which is three to five times more expensive than in other places relevant to competition. We have overwhelming bureaucracy. We have very high taxes and fees. Corporate taxation is one of the highest internationally. And we must also address the issue of wages and labor costs as a society," she suggests.

The president of the DIW institute, for his part, urges the new German government to "change the course of economic and financial policy." Fratzscher proposes a five-point plan to get out of the shock in which Germany finds itself: an ambitious plan for reform the debt brake (anchored in the Basic Law, the German Constitution), reforming the social security system, promoting the energy transition and reducing the skills shortage through migration.

The debt brake is an issue that greatly concerns Felix M., a financial economist born in Hamburg and living in Berlin. "It limits us so much that we cannot spend on infrastructure or invest in future technologies. I would say that if we were to remove it, things would go a little better," says Felix, who will vote for La Esquerra in the elections because, in his opinion, "they have the best electoral programme."

The far right imposes its agenda

The far-right party Alternative for Germany (AfD) has managed to impose immigration as the main campaign issue. The AfD, which is second in the polls behind the conservatives, has promised in its election programme to close the borders and carry out mass deportations of illegal immigrants and foreign criminals.

"I know people who vote for the AfD. I would say that they are not far-right. They are normal people, they are not Nazis. They are simply fed up" with the other parties not providing solutions to their problems, explains Stefan, a Berliner, as he walks through a shopping centre in Potsdamer Platz. This German, like many compatriots, is hesitant to vote for the conservative alliance of the CDU-CSU or the far-right in these elections.

"The AfD's election programme would completely destroy the German economic model," warns Fratzscher. "The AfD wants to destroy the European Union, leave the euro, close the borders. This would be the end of the German economic model, which is based on openness," he says. He stresses that exports account for 45% of economic output and almost every second job. The economist also believes that Germany needs more immigration, not just skilled immigration, but of all kinds.

"There are already 1.7 million vacant jobs. Millions of people from the generation of the future are already in need of a job. baby boom "More people will retire in the next ten years than young people who will enter the labour market. Without immigration, Germany would continue to lose competitiveness. Without immigration, potential growth would be zero, i.e. stagnant," warns the president of DIW Berlin.