Not even Germany is immune

Bad news from the markets in Germany: for the first time since January, the DAX, the country’s major stock index, has fallen below the symbolic threshold of 6,000 points. As a result, Berlin will have to contend with a reality that it would rather ignore: Germany, which until now has been able to weather the crisis, is finally being affected by recession.

“This black month of May should be a warning to political leaders that they must address the uncertainties of workers and European companies”, remarks Süddeutsche Zeitung. As an exporting country that relies both on its European neighbours (including Greece and Spain which are subject to economic instability) and emerging countries (where the boom is slowing down), Germany will have to act quickly, and more importantly —

... accept the fact that the focus of economic policy can no longer be limited to the territory within its national borders.

This view is also shared by Spiegel Online, which argues that —

Germany’s biggest mistake has been to view the crisis as a problem for other countries: an issue for the Greeks, the Portuguese, the Spanish and the Italians. Standing back is no longer an option.

Calling on Berlin to guarantee the debts of its neighbours, the news website reports in a second article that Angela Merkel is in the process of changing her strategy to move away from an austerity only approach. Berlin is reportedly preparing a “growth package for Europe” which will include

• an additional 10 billion euros in capital for the European Investment Bank

• reforms to the process for the attribution of European funds, and the introduction of “project bonds” for the financing of pan-European infrastructure projects

• support for the European Commission’s 7.3 billion euro plan to fight youth unemployment

• and greater financial and economic coordination within the Eurozone.