Heiner Flassbeck: Overkill – The ECB is driving the European economy up the wall and everyone is watching

The economic situation in Germany is bad, very bad indeed. There are indicators such as the so-called Markit PMI that predict a similarly devastating scenario for German industry as at the time of the great global financial crisis of 2008/2009 or at the time of the Corona shock in 2020. The ifo index also plummeted massively in July. The recently published bank lending survey of the European Central Bank (ECB) shows how strongly the tightening of monetary policy is already having an effect; lending to companies is falling rapidly. But those responsible in government and the central bank look the other way. They do not want to see what is happening because they do not want to admit how fundamentally wrong they have been with their estimates and forecasts.

It starts with the Federal Minister of Economics, who still does not want to take note of reality. In his latest monthly report, he writes that the current data on economic indicators point to a “moderate underlying economic momentum after a noticeable cooling at the end of the first quarter” and “to a gradual recovery of the industrial economy in the coming months”. This is no longer window dressing, these are the tightly closed eyes with which small children believe they can drive away an acute danger.


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