BERLIN, GERMANY – NOVEMBER 15: German Finance Minister Christian Lindner makes a statement to the media at the Chancellery after the weekly government cabinet meeting on November 15, 2023 in Berlin, Germany. The topic came after Germany declared that the coalition government's transfer of federal funds in 2021 was originally intended to mitigate the effects of the coronavirus pandemic, and that it was illegal if they were not used for climate change mitigation measures. It was a ruling by the Constitutional Court. (Photo by Sean Gallup/Getty Images)
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Germany's finance minister offered a new metaphor for the country's ailing economy on Friday, after months of debate over whether Europe's traditional powerhouse has become the “sick man of Europe.”
“I know what some of you are thinking: Germany is probably the sick man. Germany is not the sick man,” Christian Lindner told World Economic Forum delegates on a Bloomberg panel on Friday.
“After a very successful year since 2012 and a crisis this year, Germany has had a short night and is tired,” Lindner said.
References to Germany as the “sick man of Europe” resurfaced last year. Although the economy avoided recession at the end of 2023, economic growth contracted by 0.3% year-on-year as it suffered from high energy costs, inflation and interest rates. Germany's manufacturing production, excluding construction, fell by 2% in 2023.
The title “sick man” was first used to describe the German economy in 1998, as the country navigated the costly challenges of a post-unification economy.
“The low growth expectations are partly a wake-up call, and now we're drinking good coffee, but that means structural reforms so we can continue to be economically successful,” Lindner said.
The latest data suggests the German economy faces a long-term slump, with research firm Capital Economics predicting no growth in Germany in 2024.
Germany faced a fiscal crisis late last year after the Constitutional Court ruled that redistributing unspent debt was illegal as it violated fiscal rules.
As a result of negotiations, Germany reached a budget agreement that maintains its debt limit in 2024. The government aims to save 17 billion euros ($18.51 billion) from the budget by cutting costs and eliminating climate-damaging subsidies.
“We had to solve the debt and deficit problem, which made me the loneliest minister in the Cabinet, but the debt problem had to be solved,” Lindner said Friday during a WEF panel discussion on the World Economic Outlook. I was successful in doing so.”
—CNBC's Ruxandra Iordache and Hannah Ward-Glenton contributed to this article.