German auto giant's troubles show why UK shouldn't copy European economic model
As Labour plans to adopt European-style policies a major crisis hits German industry. Volkswagenʼs factory closures and wage cuts signal deeper problems in Europeʼs largest economy
UKʼs economic path has always been different from its European neighbors since the 80s‚ with closer ties to US-style free-market approach than continental Europeʼs social model. Now after winning recent elections Labour wants to change that
The timing couldnt be worse: Europeʼs biggest economy is showing cracks in its foundation. Volkswagen just announced plans to shut down 3 factories in Germany and cut worker pay by 10% (which hasnt happened since WW2 ended)
German industry faces multiple challenges - Russian energy isnt cheap anymore Chinese buyers prefer local brands‚ and the switch to electric-cars caught them off-guard. Its like UKʼs car industry problems from about 50 years ago; but with extra steps
- Lost access to affordable Russian gas
- Slow adaptation to EV market
- Growing competition from China
- Too many rules and regulations
Former ECB chief Mario Draghi wrote a report suggesting EU needs 300-billion euros yearly investment to stay competitive; but thats not how success works - just look at US tech giants like Apple or Microsoft who didnt need government money
European car factories are running at half-speed these days with sales down by 3 million units compared to pre-covid times. The big-5 automakers (BMW‚ Mercedes‚ Stellantis‚ Renault‚ VW) are fighting for survival in a shrinking market
Britain already went through its industrial changes and now focuses on digital and creative sectors. Adding more social taxes raising minimum wage and copying EU-style worker rules - like Labour wants to do - wont help UK stay competitive in todays world
