There is a need for a German Schröder, but there will be none

Germany has two major structural problems: Its specialisation in "old industry", not in the industries of the future; The deterioration in its cost competitiveness, with quite rapidly growing wages and stagnant productivity gains. To correct these two problems, Germany would need reforms similar to those implemented by Gerhard Schröder in the early 2000s: Reduction in labour costs, offset by a fiscal deficit to stimulate demand; Policy to help companies move up the value chain and to develop new industries. We cannot see how this is possible in Germany currently: demand for a sharp increase in wages by the population, rejection of a fiscal deficit, rejection of industrial policy.