Germany’s Industrial Collapse: Follow the Money

The FT documented how Germany is failing. Here’s who’s profiting from the decline – and why reversal is politically impossible.

Grüezi!

Last week the FT asked “Can Anything Halt The Decline of German Industry?”

It was a sparkling piece of elite journalism: a comprehensive review of the symptoms, telling examples, well-evidenced – a brilliant tour d’horizon, but studiously vague about both agency and beneficiaries.

Let me map out the interests served by the policies that produced this crisis.

This analysis might strike some readers as cynical or contrarian. I’d argue it’s simply materialist: following the money to examine whose position improves as Germany’s worsens.

A note on Ukraine: Nothing that follows implies Germany should have abandoned Ukraine or maintained Russian energy ties after February 2022. Supporting Ukraine against Russian aggression was morally and strategically necessary.

But examining who benefits from how that support was implemented – and what costs were hidden – is equally necessary. Good intentions don’t eliminate the need for accountability about execution.

---

1. The Energy Policy Winners

American LNG exporters are the obvious beneficiaries of Germany’s energy transition.

The destruction of Nordstream – treated as non-event in the article – represented the largest forced market reallocation in energy history.

German industry now pays substantially more for gas. European wholesale prices averaged around €27/MWh in early 2024 and rose to €47/MWh by year’s end, compared to €16-25/MWh for Russian pipeline gas before 2022.

Do the maths. Germany’s total industrial gas consumption runs around 515 TWh annually (including industrial power generation). At a €15/MWh average premium for 2024, that’s €7.7 billion annually transferred from German industrial competitiveness to energy producers.

Over a decade at current differentials, that’s €77 billion – roughly 18 times Trumpf’s current annual revenue of €4.3 billion, or five times the annual revenue of Germany’s entire machine tool sector (€15.4 billion in 2023).

Export your way out of that.

But energy costs are only mentioned in passing, almost as if they’re ambient noise rather than deliberate policy choice. Why?

Because acknowledging this forces an uncomfortable question:

• Who decided this trade-off was acceptable?