Europe’s Economic Engine is Breaking Down

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

Germany has been Europe’s economic engine for decades, pulling the region through one crisis after another. But that resilience appears to be breaking down: the country suffered its first recession since the start of pandemic over the winter, spelling danger for the whole continent. Challenges ranging from the fallout from decades of flawed energy policy to the demise of combustion-engine cars are converging to pose the most fundamental threat to the nation’s prosperity since reunification. But unlike in 1990, the political class lacks the leadership to quickly and effectively tackle structural issues gnawing at the heart of the country’s competitiveness. As soon as the risks of energy shortfalls eased, Chancellor Olaf Scholz’s unwieldy coalition became bogged down in petty infighting over everything from debt and spending to heat pumps and speed limits. Read more here on the many challenges Germany faces.