One of Germany’s most iconic brands may shutter more factories and eliminate tens of thousands of additional jobs. Persistently weak business at Volkswagen means staff cuts could double to 100,000, Manager Magazine reported today. Volkswagen’s troubles — along with Robert Bosch Chief Executive Officer Stefan Hartung’s surprise decision to step down — underscores why some economists again see Germany as the sick man of Europe.
Trouble in the European Union’s biggest economy points to a broader need for structural reforms to get a better handle on exogenous pressures like more expensive energy and security threats. One of the trickiest adjustments is to the emergence of Chinese automobile manufactures who can compete with German giants on their home turf. One in 10 new cars now sold in Europe comes from China.
Chancellor Friedrich Merz’s coalition is negotiating as much as €20 billion ($22.8 billion) in income-tax relief to stimulate the economy. Another respite may come from interest rates, as traders are paring bets that the European Central Bank will lift borrowing costs this year. —Jonathan Tirone
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