Angela Merkel’s failures serve as a warning to British leaders

Otto von Bismarck, the 19th-century German chancellor, has been quoted as saying: “Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.” Rishi Sunak has not been in office for long enough to qualify as a fool in Bismarck’s definition. But he could have learned from the mistakes of Bismarck’s modern-day successors. The UK and Germany have very different economic problems. Germany had become reliant on old industries and technology. Brexit has exacerbated the UK’s pre-existing economic ailments such as low productivity and the dependence of its financial industry on the eurozone. What both countries have in common is that their economic models are unsustainable, and that their political leaders have dropped the ball.

Angela Merkel’s politics of the last decade is a cautionary tale, one that holds lessons for Sunak. For all her analytic rigour, Merkel was uninterested in solving problems. She agreed to global emissions benchmarks and Nato military spending targets that she had no means of meeting.

The austerity policies of successive Merkel-led coalitions led to a shortfall in public investment of half-a-trillion pounds. The dire consequences have only become apparent recently. A motorway that links the north and the south of Germany has been closed because there was no money to repair a bridge which had become unsafe. A Bundeswehr general warned that the army is so underfunded that it is not in a position to fight a war over several weeks. There is a clear pattern here. 

Nothing quite compares in terms of short-termism to Merkel’s decision to speed up the exit from nuclear power. Germany was outwardly a successful economy during her period in office. Growth rates were good and public finances were rock-solid. Some naive foreign observers were so impressed that they gave her the accolade of leader of the Western world. They didn’t see what was brewing under the surface.

Germany has missed out on the digital revolution in many sectors. It was still clinging on to 20th-century industries that relied on cheap Russian gas to stay competitive. To this day, German politicians, whether conservative or Green, have not questioned Germany’s industrial model. To her credit, Merkel was never quite as cynical as Sunak, whose five-point to-do list consisted mostly of self-fulfilling promises. The Bank of England is already predicting that inflation will fall sharply from the middle of this year. Economic growth will return at some point. Has there ever been a recession that does not end?

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