The locomotive of Europe moves, albeit slowly. The February Zew index, a barometer of economic trust, has improved beyond estimates. But the crisis is there. Just think of the drop of 2.4% of the industrial production of December, a collapse that has not been seen since May 2020. And just think that it seems Berlin is ready for a historical step: to review its granite position against state aid in Europe .
The February Zew index, which measures economic expectations for the next six months, has recorded an increase. He stood at -88.5 points, against a -90 expected by analysts. Always in negative territory, but it is an improvement compared to -90.4 of January. Trust in the German economy also leaned by 26 points, well beyond the expectations of 19.9 and 10.3.
Today’s data suggests cautious optimism among institutional investors, which see signals of stabilization in the German economy. But trust clashes with an industrial reality that suffers. This is demonstrated by the drop of 2.4% of industrial production in December, the worst since the time of the pandemic. The automotive sector, historically driving down the locomotive, contracted by 10%, contributing to an annual flexion of 4.5% for the entire 2024.
A turnaround or a simple technical rebound? Experts warn that the improvement of trust does not indicate a real reversal of a trend of an economy in crisis. The Bundesbank has already warned that German GDP could also undergo a new contraction in 2025, thus fueling the fears of prolonged stagnation. They remain a weak internal question, an industrial production that suffers and modest growth prospects. The Zew index, while improving, remains negative and Germany continues to be vulnerable, especially with the United States in protectionist mode and China with weak growth. The two countries are the main outlets for German exports.
And so Berlin seems ready to review his historical opposition to state aid in Europe. The Scholz government proposed that the Clean Industrial Deal of the European Commission, expected on February 26, includes measures to facilitate the provision of state aid in favor of the decarbonisation of industry. A change of course for Germany, which has increasingly braked on state aid, for fear of distortions in the European single market. But at this point it seems that stimulating and supporting the “home” economy is more fundamental for Berlin than to fight against state aid. And the internal elections are really upon us.
