There was an melancholic air as Mercedes Benz launched a year-long, worldwide party to celebrate the 140th anniversary of the motor car.
For many, its birth certificate is patent number DRP 37435, issued on January 29th, 1886, to Carl Benz for a “gas-powered vehicle”.
The “Benz patent motorcar Model 1” was a brave departure: a unified single-cylinder engine and chassis on three wire-spoke wheels with a top speed of 16km/h and 0.75 horsepower.
“I believe in the horse,” was Kaiser Wilhelm’s tepid response. “The automobile is a passing fad.”
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Some 140 years on – 110 years longer than the kaiser lasted – German-built cars may be the longest fad in history.
But for how much longer? As China’s automobile industry pushes aggressively into Europe, many Germans wonder what Mercedes-Benz will have to celebrate for its 150th anniversary.
And what of the German economy, driven like no other industry by its car giants Mercedes, BMW and Volkswagen?
That all came just as Germany revised its economic forecast for this year to just 1 per cent, down from 1.3 per cent, citing heightened global trade fears and an acknowledgment that fiscal stimulus measures have yet to make themselves felt.
With an eye on the Benz anniversary, Germany’s economics minister Katherina Reiche said the country must pivot toward new “growth engines”.
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Her hope is a two-track approach to investment. One track is multibillion state spending on infrastructure, defence and climate change measures. The other track is to push reforms tailored to attract private investment, which makes up only 16 per cent of Germany’s total.
Reiche, portrayed by Der Spiegel this week as an incompetent, image-obsessed micro-manager, told journalists on Friday: “How we secure prosperity, competitiveness and social peace in this new situation, that is the question.”
Asking questions rather than providing answers – let alone action – is a common criticism of the German federal government, at all levels.
Almost a year on from the election that brought Friedrich Merz to power, the chancellor’s economic report card remains mixed-to-negative.
In business circles, managers are tired of the 70-year-old former Blackrock executive’s repeated diagnoses and lists of what needs to happen, as if he has forgotten was elected to make things happen.
A typical example was last week’s Merz letter to his coalition’s MPs, promising to prioritise economic reform in 2026, saying: “The situation in many sectors is very critical.”
Further eye-rolling followed a recent state visit to India. In speeches there, in Davos and Berlin, Merz has promised to pivot the German economy away from the US – without any detail, map or timeline.
Coalition politicians insist the government is pushing through reforms at a record pace, with plans to cut corporate tax and streamlining the welfare system – though without cutting payments.
But after nine months in office, with firms closing daily in every sector, Germany’s business lobby groups say announcing plans is different from actual implementation.
“Our SME family firms see none of the notable improvements that are urgently needed,” said Marie-Christine Ostermann, president of the Family Firm lobby group, on national radio. “The reforms to date have not been courageous enough. Germany is no longer competitive.”
This view is widely-held and features in a recent KMPG report, warning that “a real upturn in Germany is not to be expected without far-reaching reforms”.
“High energy costs, rising social security contributions, lengthy planning and approval procedures, and excessive bureaucracy continue to weigh on the German economy,” the report concluded.
A separate OECD study shows one reason why: taxes and social contributions for a single person without dependents in Germany adds up to 47 per cent on top of labour costs, the second-worst in the 38-country OECD list. The organisation flags this as one of many impediments to investment in the country.
This grim outlook is widespread, judging by the slump in December’s IFO business climate index to 87.6 percentage points, down from 88.0 points the previous month.
Other indicators tell their own tale, such as a the highest January unemployment in 12 years. Meanwhile the Verdi trade union is ramping up pressure on pay and conditions, with hospital strikes last week followed by a countrywide public transport strike on February 2nd.
Despite all its difficulties, the KPMG report predicts the German economy will pick up “cautiously” in 2026, noting growth forecasts of up to 1.5 per cent.
But they are based on the assumption that Germany’s borrowed billions for road and railways makes itself felt.
The Bundesbank was less cheery in its last monthly report, noting that Germany had been “clearly in recession since the end of 2022”.
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One third of its own forecast of 0.9 per cent growth this year, it noted, was not down to the ruling coalition but the calendar: more public holidays on weekends in 2026, leading to a higher number of working days.
Leading Bundesbank officials remain sceptical, if diplomatically silent, that the government’s multibillion debt investment will succeed. For one thing, the government is struggling to disburse the billions it has borrowed.
Though federal investment rose by 17 per cent last year to a record €87 billion, this was nearly €29 billion short of Berlin’s own schedule.
“We need to do better here,” admitted a sheepish Lars Klingbeil, federal finance minister.
As Merz’s first year in office looms in May, some onlookers are suggesting Germany’s problems are as much psychological as economic, with too many younger Germans taking decades of prosperity and wealth for granted.
“Youth discipline is often limited to self-optimisation,” sniped Fatina Keilani, a columnist in Die Welt daily. “6am on the gym treadmill is no problem. But to show up at 6am to work, even with no enthusiasm? Difficult.”
Some 140 years after sparking one innovation after another, Keilani suggests the modern German state suffers from similar lack of discipline, “confusing standstill for stability, talking too much about redistribution and too little about accomplishment”.
