The German economy is ‘tired’ and needs a ‘good cup of coffee’, according to one of its most senior ministers.
As the once-mighty industrial powerhouse faces another year of recession, the country’s finance minister Christian Lindner insisted it was not the ‘sick man’ of Europe.
But speaking at the World Economic Forum in Davos, Switzerland, he added: ‘Germany is a tired man after a short night.’
He said the country needed a ‘good cup of coffee’ in the shape of economic reforms to resume its previous success.
The admission – after a bleak year in which Germany was the worst performing economy in the Group of Seven major industrialised nations – came as European leaders said the continent must steel itself for the return of Donald Trump to the White House.
‘Tired’: Germany’s finance minister Christian Lindner insisted it was not the ‘sick man’ of Europe
Christine Lagarde, head of the European Central Bank, told delegates in Davos that ‘the best defence is attack’ and that to be ready for battle Europe must be ‘strong at home’.
Growth in Europe is being dragged down by Germany, whose economy shrank by 0.3 per cent last year, making it a laggard on the world stage.
The growing likelihood of a Trump victory in this year’s presidential elections, and the potential impact on the rest of the world, have been a key theme at this week’s meeting of global business leaders and politicians in the Swiss ski resort.
His previous spell in power saw Trump launch a damaging trade war with Europe, imposing swingeing tariffs on steel and aluminium.
The EU retaliated with levies of its own on American products such as jeans and bourbon.
Relations have thawed under his successor, Joe Biden, but European leaders are girding themselves for the possibility of a renewed confrontation. Lagarde said: ‘The best defence – if that’s the way we want to look at it – is attack. And to attack properly, you need to be strong at home.’
That will mean improving the functioning of the single market and making sure Europeans’ savings flow into its capital markets to fund much-needed investment in the transition to renewable energy, she said.
Lindner, meanwhile, said Europe had been ‘talking too much’ about Trump but needed to become less reliant on US military protection, and improve its global competitiveness.
He said: ‘Doing our homework is the best preparation for a possible second term of Donald Trump and this includes our capabilities to defend ourselves.
Ready for battle: ECB chief Christine Lagarde
‘Being an attractive partner on the high level when it comes to the economic situation, and when it comes to fair-burden sharing under the roof of Nato, is the best we can do to be in a good partnership with the United States. It doesn’t matter which administration [is in power in the US] if we are attractive, if we do not have to ask others, because we have capabilities ourselves.’
But Lindner said he was ‘concerned’ that some politicians in the European Union were following the US in trying ‘to subsidise almost everything’.
‘We have to avoid a subsidy race we cannot afford,’ he said.
David Rubenstein, co-founder of US private equity giant Carlyle, said of Trump: ‘He clearly has a following that many of the analysts missed.
‘I think people should recognise that he’s a serious political force and should not discount the fact that he could well be elected again, despite that many people in Europe, where we are now, are not really his biggest fans.’
Rubenstein cautioned that trading relations were likely to remain chilly, whoever wins the election.
‘The word trade in the United States, or trade agreements, is almost a curse word now,’ he said.
‘Trade is often seen by certain constituencies in the United States as favouring jobs offshore and not popular at all.’
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