The year 2015 is likely to be a big one for Europe’s largest economy.
The fate of the euro and Greece’s participation in it, Europe’s relationship to Russia and Ukraine, the threat of deflation, Germany’s troubled transition to alternative energy, the German government’s insistence on euro zone austerity, the elusive trans-Atlantic trade treaty and Europe’s underfunded digital future, could all be high on the agenda.
The fate of some German industry titans may also be decided this year: Siemens CEO Joe Kaeser, Deutsche Bank co-CEOs Jürgen Fitschen and Anshu Jain, new BMW CEO Harald Krüger and VW brand chief Herbert Diess, and Germany’s longest-serving DAX CEO, Herbert Hainer of Adidas, faces challenges new or old. The future of Germany’s largest utilities – E.ON and RWE – are also less than certain amid the country’s accelerated, disruptive rush toward wind and solar energy. 2015 may even be the year when Berlin’s political leaders dare to wager when the city’s scandal-plagued new airport will actually open – but don’t hold your breath.
Handelsblatt Global Edition presents its list of 10 stories with the potential to shape German business news headlines in 2015.
The Ukraine, Russia End Game
The conflict over the future of Ukraine is certain to occupy political and business leaders in Germany, Russia’s largest trading partner. Sentiment is rising for Germany to withdraw from E.U. economic sanctions placed upon Russia, which are hurting some German exporters. Germany’s chancellor, Angela Merkel, will continue to play a key role in the ultimate outcome, as one of the West’s only intermediaries with regular contact to Russian President Vladimir Putin. So far, Ms. Merkel has toed the West’s tough line against Russia.
Euro Zone Make or Break
The future of Europe’s single currency appears stable heading into 2015, with global financial markets still believing in the magic of Mario Draghi, the Italian economist and president of the European Central Bank. On January 1, the currency zone will even grow from 18 to 19 members, adding Lithuania, which shares a border with Russian enclave Kaliningrad. Mr. Draghi’s controversial plan to begin a U.S.-style quantitative easing purchase of riskier country government debt in 2015 won’t go down easy in conservative Germany, but Mr. Draghi knows how to count votes.
Germany’s Energy Troubles
The future of Germany’s conventional energy suppliers, E.ON and RWE, should come into focus in 2015 as Germany continues its break-neck transition from fossil fuels to wind and solar power. The government-mandated move in the wake of Japan’s Fukushima disaster has forced the utilities to reinvent themselves to survive. E.ON has taken the bit, making plans to exit its fossil business and go with the renewable flow. RWE, more a captive of its short-sighted municipal shareholders and labor unions, is trying to hold out but market pressure is mounting.
Deutsche Bank’s New Look
The first half of the year will be key for Germany’s largest bank, which is in the process of considering a series of major asset sales – Postbank and its private clients business among them – that could redefine the bank’s potential and ambitions going forward. The new strategy is also likely to have a decisive influence on the leadership of the bank’s co-chief executives Jürgen Fitschen and Anshu Jain, who must present and sell a credible plan to keep Deutsche Bank in the Bundesliga of global finance.
The End of TTIP?
The much-troubled Trans-Atlantic Trade and Investment Pact, a plan to roll back customs dues on both sides of the Atlantic, could face an ignominious end in 2015, if U.S. and European negotiators are unable to overcome fundamental differences in health, copyright and privacy law that apparently stand in the way of passage. Germany – specifically the Social Democrat minority partner in Chancellor Merkel’s ruling coalition – could deal the death blow, if vice chancellor Sigmar Gabriel caves in to his party’s left wing, which equates TTIP with Ebola.
Political Wild Cards Greece and Spain
National elections in Europe could alter the course of events on the Continent, or at the least in the euro currency zone. Greece’s Syriza party, which bitterly resents the euro zone austerity measures imposed on Athens, could take office, perhaps leading the country out of the euro and into financial chaos. But even if cooler heads prevail in Greece, Spain’s Podemos party – which equally questions the sense of the euro and member countries’ commitment to fiscal discipline – may prevail in an election later in the year, bringing the euro into a new existential crisis.
Germany’s Evolving Identity
Europe’s largest economy is expected to continue to grow in 2015, albeit more slowly than before, and with it so will Germany’s sense of pride and stature. Visitors to Germany are now at record levels and Berlin is now one of Europe’s fastest-growing tourist destinations. The German chancellor is seen as a forceful but beneficent leader and the country is experiencing a post-war cultural and business renaissance. Expect renewed calls domestically for Germany to get a permanent seat on the U.N. Security Council and, perhaps from abroad, calls for more German military spending.
Germany Goes French
The year 2014 was one of the most contentious for German labor relations in recent decades, as the country’s still-powerful unions – led by pilots, flight attendants and locomotive engineers – went regularly on strike, injecting an unusual amount of chaos, discomfort and unpredictability in a country that abhors all three. By year’s end, Deutsche Bahn appeared to have made some progress toward resolving differences with its employees, but clearer skies were nowhere in sight for Lufthansa, Europe’s second-largest airline, which enters 2015 with its fractious workforce only nominally in tow.
Record numbers of asylum seekers from Syria, Africa and Asia are presenting Germany with a big test of its post-war tolerance. Demonstrations by right-wing organizers in Dresden – some using the anti-immigrant banner as a cover for nastier, more pedestrian xenophobia or outright neo-Nazis – have unsettled harmony-seeking Germans. While the number of Germans who favor immigration far outweighs the few thousand televised radicals, the nation’s political establishment are mobilizing to stop the angry mobs without feeding the movement.
Germany’s Austerity Pledge
Since the 2008 global financial crisis, the United States and Great Britain have urged Germany to spend its way back to health. But Germany has resisted those calls – which offend its frugal DNA – and by saving and other low-cost means, has recovered without the need for fiscal Viagra. But if euro zone uncertainties persist, and the German economy stagnates, Chancellor Merkel will come under increasing pressure to break out the good stuff and abandon, at least temporarily, the goal of a balanced government budget.
Sources of photos: All dpa except: two: Bert Bostelmann, bildfolio; three: picture alliance, Bloomberg; five: Hans-Christian Plambeck, laif; nine: imago; ten: Reuters.
Kevin O’Brien is editor in chief of Handelsblatt Global Edition. To contact the author: email@example.com