Wolfsburg (Germany) (AFP) – Chancellor Olaf Scholz on Friday laid out his vision to revitalize Germany’s ailing economy at a campaign event in the historic home base of crisis-hit auto titan Volkswagen. In front of a crowd of supporters, Scholz defended his government’s record on the economy — which has been battered by an energy crisis, high inflation, and a manufacturing slump — while pledging to boost investments. The embattled chancellor, facing a general election next month, spoke in Wolfsburg, home to the historic headquarters of Volkswagen, whose rapidly fading fortunes have come to symbolize the broader crisis pummeling Europe’s traditional industrial powerhouse.
How to rekindle Germany’s beleaguered economy, which shrank in 2024 for the second straight year, has become a key campaign issue ahead of the February 23 vote. Scholz, from the centre-left SPD, conceded the economy faced “challenges,” in particular because it was “globally interconnected.” But he said this contributed to Germany’s economic strength, adding: “We have to defend it by investing here in Germany.”
“We need new growth that gives us the opportunity to have jobs throughout the country,” Scholz told the roughly 1,500 supporters who turned up. Scholz outlined ways he planned to bolster the economy, such as greater investments in green industries, more renewable energy generation, and a reduction of red tape. He also called for an overhaul of Germany’s so-called debt brake that limits government borrowing, which critics say has prevented much-needed spending in a vast range of sectors in recent years.
Scholz, frequently criticized for his apparent lack of charisma, faces an uphill battle to win re-election. The three-party coalition he headed was riven by infighting and imploded spectacularly in November amid a row over the budget, paving the way for next month’s snap election. His Social Democrats (SPD) are languishing far behind in opinion polls at around 16 percent. That compares to around 30 percent for the conservative opposition led by Friedrich Merz — who is widely expected to become the next chancellor — while the far-right Alternative for Germany (AfD) is second at about 20 percent after a recent surge in popularity. Scholz took aim at Merz’s CDU party, saying it wanted to introduce “tax cuts for the wealthy” rather than focus on investing more.
Despite the chancellor’s upbeat message, the mood in Wolfsburg, a city of 128,000 people in Lower Saxony state, was bleak. After three months of bitter negotiations, management and unions struck a deal last month that will see 35,000 VW jobs cut by 2030 as Europe’s biggest carmaker seeks to drastically reduce costs. VW — hit hard by high manufacturing costs and fierce competition in key market China — ultimately pulled back from a threat to shutter factories in Germany for the first time in its 87-year history.
Kathrin Kuehne, a pensioner who worked for 27 years at the automaker, lamented that the days when the group “brought us prosperity” were long gone. The current crisis at the automaker, whose 10 brands range from namesake VW to Porsche and Seat, was “a catastrophe,” the SPD activist told AFP as she attended Scholz’s event. In his speech, Scholz insisted that his government had rescued jobs at the carmaker while calling to keep “moving forward” with ramping up production of electric vehicles.
Sales of EVs have been slowing, hitting carmakers worldwide, while VW in particular has been criticized for a mismanaged shift to electric, with critics contending it has allowed Chinese competitors to gain ground. Peter Harweg, a Wolfsburg resident who works for an auto supplier but was not at Scholz’s speech, sounded disillusioned with politics in general. “The CDU was in power for 16 years with (former chancellor Angela) Merkel. What have we done in 16 years?” asked the 51-year-old. “No one really has a plan.”
© 2024 AFP
