Pioneer Briefing US Edition

All-Time-Low: Investors Say Goodbye


Good Morning,

Finance Minister Christian Lindner is facing a crucial challenge. Germany needs to be in the game of attracting foreign capital. It is vital to restructure Germany’s domestic capital stock – for its aging society and an environment in need. Yet, both the private and state capital stocks are being drained.

Finance Minister Christian Lindner © Anne Hufnagl

Why is this so important? Because there's an inseparable link between economic growth and the well-being of democracy. Or, as Eric Gujer, editor-in-chief of Neue Zürcher Zeitung (NZZ), recently wrote:

If the economy is doing poorly, the populists are doing well.

Here are five uncomfortable truths about a country with an eroding capital base:

#1 The state consumes more than it invests:

For decades, Germany's governance has been depleting its funds. The vast tax revenues and loans from the capital market are largely funneled into expanding the welfare state, rather than maintaining public infrastructure. There's a significant, observable backlog of investments in roads and railways, as well as in administration and the education system. In Germany, consumption is favored over investment.

Public investments fall significantly below the EU average. Currently, they amount to 2.6 percent of GDP, while the EU average stands at 3.2 percent. In contrast, the social budget grows disproportionately – with an average annual growth rate of 4.25 percent since the year 2000.

Olaf Scholz © imago

In 2024, moderate spending remains unlikely. Olaf Scholz is keen on preserving the post-Schröder consensus within the Social Democratic Party (SPD) and shows no inclination towards reevaluating governmental expenditure priorities.

Eine Infografik mit dem Titel: Investors Say Goodbye

Balance of companies' investment activities, indexed in points

#2 A shrinking economy deters investors:

The weak growth of the German economy inevitably leads to investors being cautious. A stagnant real estate sector, declining industrial production and a general air of frugality amongst consumers contribute to investors' wait-and-see attitudes.

The net outflow of capital from Germany, which had initially weakened between 2014 and 2018, surged again from 2019 onwards. According to the OECD, the figure for 2022, at approximately $132 billion, represents the highest net outflow among the world's 46 most economically significant countries.

Eine Infografik mit dem Titel: Investments: Net Negative

Inflows and outflows of direct investment to Germany, in billion US dollars

The reality is that we are witnessing an all-time low, with the highest net outflows of corporate capital in Germany's post-war history.

#3 Waiting for the green ‘economic miracle’:

"Our country faces a bright future. Due to significant investments in climate protection, Germany will be able to achieve growth rates similar to those last seen in the 1950s and 1960s," Olaf Scholz claimed in an interview published on March 13, 2023.

However, according to Credit Institute for Reconstruction (KfW) Chief Economist Fritzi Köhler-Geib, the truth is that while the global market for green technologies is expected to grow by around 7 percent annually until 2030, much of this growth is not occurring in Germany.

In the field of electromobility, a key technology for the green revolution, Americans and Chinese have taken the lead. The same dynamics apply to other green technologies and the rest of the global economy. German manufacturers of photovoltaic systems are well aware of this: once innovative technology becomes mass-produced, Germany's competitive disadvantages act as a showstopper.

Minister of Economic Affairs Robert Habeck © dpa

Robert Habeck's energy transition plans on replacing old capital stock without increasing production output. Prof. Clemens Fuest, President of the ifo Institute, says, "this does not increase prosperity." Economic expert Prof. Veronika Grimm adds that "it could even decrease, as functional installations are dismantled and scrapped—for instance, coal power plants and nuclear facilities."

Eine Infografik mit dem Titel: Solar: Investments Back on Track

Germany's investments in the construction of photovoltaic systems since 2010, in billions of euros

#4 European Central Bank interest rate policy complicates investments:

The European Central Bank's (ECB) interest rate policy has led to more expensive borrowing, which combats inflation but does not stimulate investment. The fact that a round of interest rate cuts in Europe is only expected after a rate cut in the USA has further dampened the investment mood of European consumers.

Michael Hüther, head of the German Economic Institute, succinctly states:

The ECB raised interest rates too late in 2022 and now risks delaying rate cuts too much, endangering growth.

IW Director Michael Hüther © dpa

#5 Deindustrialization as a megatrend:

The deindustrialization of Germany is not an isolated event. This trend has been observable across the entire Western world since the 1970s. To paraphrase Stefan Zweig, we are witnessing the transformation of the world, only this time, from an industrial society to a service-oriented one.

Eine Infografik mit dem Titel: Germany and the Lack of Innovation

Innovator rate, i.e. the proportion of companies that have brought out at least one innovation in a year, as a percentage of all companies

At the beginning of the 1970s, the industrial sector accounted for 40 percent of gross value added in West Germany. Then began a wave of contraction. Today, the share of industrial production in Germany's overall wealth production has dwindled to just 20 percent. This erosion has accelerated during the tenure of the current government, with no visible countermeasures in sight.

Conclusion: Germany has become a no-go zone for many investors. The shrinkage of the gross national product (GNP) and the Chancellor's disinterest in improving supply conditions, act as deterrents to capital holders. Global investors are not necessarily leaving – Scholz is right about that. They're just not showing up in the first place.

Christian Lindner, Olaf Scholz and Robert Habeck © The Pioneer

Julian Nida-Rümelin with Gabor Steingart © Anne Hufnagl

We live in a polarized society – where dissenting voices are insulted, threatened and even censored. What does this say about the state of our social cohesion? Is this trend dangerous or a response to society's complex web of diverse opinions?

In today's episode of the Pioneer Podcast, we explored this question with philosopher and author Prof. Julian Nida-Rümelin.

We began by asking if the professor noticed a growing polarization in our society. Rümelin's answer shed light on the complexity of the situation:

It's not as simple as it seems. There is undoubtedly a right-wing populism that poses a threat to democracy. I deliberately refrain from calling it right-wing extremism because this category is relatively small, and such extreme positions have seen a decline in recent years. But there is a right-wing populism that capitalizes on specific resentments.

However, political discourse is becoming increasingly polarized. Expressing criticism now requires considerable courage. But what is driving this trend? According to Rümelin:

People have become more fearful and inclined to conform to societal expectations. As a result, many issues are now avoided rather than discussed openly for fear of an anonymous social media backlash of disgust and resentment. Surveys show that individuals are much more afraid to express their opinions than they were a few decades ago.

Julian Nida-Rümelin © Anne Hufnagl

However, there needs to be more room for people to share their opinions without being thwarted by inviolable boundaries that make certain topics untouchable.

Rümelin's plea:

It is not easy to draw these lines in individual cases. But boundaries must be drawn. The simplest form of boundary drawing is the law. In Germany, we have an anti-Nazi constitution, and I think it is correct to say that the existence of Israel is part of Germany's raison d'être.

This means that a line is drawn right here, namely anti-Semitism. Criticism that denies Israel's existence or campaigns against it goes beyond what is permissible in political discourse. However, sharp criticism of the Israeli government must remain within the spectrum of what can be said. One must be able to sharply criticize the actions in the Gaza Strip, which have resulted in more civilian casualties than in the Ukraine war, and has been going on for much longer without being labeled anti-Semitic.

Click here to listen to today's episode of the Pioneer Podcast in German.

If you want to hear the whole conversation in German, tune into today’s episode of the Pioneer Podcast.

Vladimir Putin during a visit to his campaign headquarters after the presidential elections © dpa

In 2018, Putin received 76.7% of the presidential election votes. Yesterday’s election was not much different. According to the Russian electoral commission, Putin secured the 2024 election with 87%. Putin thanked his voters.

He should have also thanked his secret service and the police security forces. As well as his most powerful opponent, Alexei Navalny, who was murdered by them in his Siberian prison camp.

This marks the beginning of President Vladimir Putin's fifth term in office. Navalny's widow, Yulia, cast her vote yesterday at the Russian embassy in Berlin. She crossed out the ballot paper and wrote her husband's name.

Yulia Navalnaya in line to vote at the Russian Embassy in Berlin © imago

  • President of the European Commission Ursula von der Leyen signed a partnership agreement with Egyptian President Abdel Fattah el-Sisi.

  • US aircraft manufacturer Boeing continues to face problems with its planes. And the winner is: Airbus.

  • More than 60 artists have re-recorded the solo hit "Going Home" by Dire Straits frontman Mark Knopfler, 74, for charity.

Olaf Scholz makes a press statement following a meeting with the Jordanian King. © dpa

Scholz in Jordan

Call for ceasefire: During a meeting with German Chancellor Olaf Scholz, King Abdullah II of Jordan called for an immediate and lasting ceasefire in the Gaza conflict. Scholz also warned against an escalation in Gaza, stating:

It is clear that we must do everything in our power to prevent the situation from deteriorating further.

The Jordanian Royal Court reported that the two leaders discussed urgent measures the international community must take to achieve this goal.

Scholz in Israel

Shifting focus: While the first visit in October focused on Israeli casualties and hostages, the Chancellor's recent visit emphasized the humanitarian situation in Gaza. He called for more continuous and reliable aid to the Palestinians. In a press statement in Jerusalem, Olaf Scholz said:

We cannot stand by and watch as Palestinians risk starvation.

Benjamin Netanyahu and Olaf Scholz © dpa

Scholz also warned against an offensive in Rafah. He stressed the need to consider whether Israel's objective "justifies such a terribly high cost" or whether there are alternative ways to achieve it. While recognizing the military reasoning for an offensive in Rafah, Scholz also highlighted a "humanitarian logic," posing the question:

How can you protect more than 1.5 million people? Where can they go?

Ursula von der Leyen, President of the European Commission, and Abdel Fattah el-Sisi, President of Egypt © dpa

Strategic Partnership: EU Commission President Ursula von der Leyen signed a partnership agreement with Egyptian President Abdel Fattah el-Sisi. Egypt is expected to help stem migration flows to Europe in exchange for EU funds.

A win-win situation: While the North African country faces significant economic challenges (inflation was around 36 percent in February), the EU struggles to handle the high number of migrant arrivals. Therefore, a deal is something from which both parties can profit.

Details of the agreement: By the end of 2027, Egypt could expect EU financial aid totaling around €7.4 billion. Reportedly, €5 billion will be provided in loans, and €1.8 billion in food security and digitalization investments. €600 million will be provided in grants, with €200 million solely for migration management.

Deal or no deal? The agreement with Egypt is similar to previous partnerships with Turkey or Tunisia. However, a similar "migration deal" failed last October. Tunisia returned some €60 million to the EU because the country refused to accept "handouts."

United Airlines Boeing 737-800 at Los Angeles International Airport © imago

Nosedive: US aircraft manufacturer Boeing continues to grapple with its plane problems. Recently, a Boeing 737-800 operated by United Airlines landed with a large hole in its exterior. The incident only became public after the landing, when ground personnel inspected the aircraft.

Recurring problems: In early January, a cabin section including a window broke off a Boeing 737 Max 9 in flight; in late January, a Boeing 757 lost a wheel during takeoff; earlier this month, a 777-200 lost a tire after takeoff. While not all incidents resulted in life-threatening situations, they contributed to a growing sense of unease about Boeing. That is a brand perception no CEO wants.

While passengers and investors are losing confidence in Boeing (down 30 percent since the beginning of the year), rival Airbus is benefiting (up 15 percent since the beginning of the year).

Eine Infografik mit dem Titel: Airbus Outflies Boeing

Airbus and Boeing share price performance since the beginning of the year, in percent


  • German Economics Minister Robert Habeck attends the German-Canadian Hydrogen Conference in Hamburg.

  • Quarterly results from Hannover Re SE.


  • Chancellor Scholz opens the "Europe 2024" conference in Berlin, which will run until March 20 and focus on current European political issues.

  • Quarterly reports: Xiaomi, Audi AG, Fraport AG.

Olaf Scholz © dpa


  • Chancellor Scholz’s cabinet will meet.

  • The Ministry of Finance presents the new sustainability report for the current legislative period.


  • The EU Summit begins in Brussels, where leaders will discuss several issues, including the war in Ukraine, efforts to strengthen Europe's defense industry, and the situation in the Middle East.

  • The Treasury Department releases the March 2024 Monthly Report.

  • Quarterly reports: BMW AG, Porsche, 1&1 AG, FedEx, Nike.


  • The IFO Institute releases its Business Climate Index for March 2024.

Mark Knopfler live in Brussels, 1991 © imago

Dire Straits frontman Mark Knopfler, 74, has had his solo hit "Going Home" reimagined by more than 60 artists. Originally featured as the theme song in the 1983 film "Local Hero," it has now entered the 21st century.

Bruce Springsteen © dpa

Among the artists affectionately dubbed "Mark Knopfler's Guitar Heroes" are rock icons such as Queen's Brian May, Bruce Springsteen, Black Sabbath's Tony Iommi, Eric Clapton and Rolling Stones guitarist Ronnie Wood. They're joined by The Beatles' Ringo Starr on drums, Sting on bass and The Who's frontman Roger Daltrey on harmonica. Dire Straits’ keyboardist Guy Fletcher produced the cover.

Proceeds from the cover will be donated to cancer charities, specifically the Teenage Cancer Trust and Teen Cancer America.

The overwhelming participation of so many artists caught the old guitarist off guard. He remarked:

I had no idea it would be like this. Guy and I knew early on that we had to expand the piece to accommodate everyone who wanted to be a part of it.

Each artist left their mark on the cover, Knopfler praised:

Eric [Clapton] came in and played beautifully, one tasty lick after another. Then Jeff Beck contributed, and that was mesmerizing. What we ended up with is really a treasure trove. The whole thing was a highlight.

Dire Straits live in Brighton in 1982 © imago

Curious? Whether the Rock 'n' Roll Allstars project was a success, or whether the adage "too many cooks spoil the broth" is true, is for you to decide. Give it a listen!

Wishing you a wonderful start to your week. Stay informed. Stay with me.

Best wishes,

Pioneer Editor, Editor in Chief, The Pioneer
  1. , Pioneer Editor, Editor in Chief, The Pioneer

Editorial Team

Eleanor Cwik, Alexia Ramos, Nico Giese & Louisa Thönig

With contributions from: Jan Schroeder & Alexander Wiedmann

Translation Team

Eleanor Cwik & Alexia Ramos

Graphics Team

Aaron Wolf (Cover Art)


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