Germany has not posted positive industrial growth in three years. That sentence would have been unthinkable in 2019. It is now a baseline fact that European policymakers are struggling to plan around.

The numbers tell a story that official statements have been careful to obscure. Car production has fallen sharply from its peak. Chemical output has continued to fall. The Ifo business climate index, which tracks German corporate sentiment, fell sharply last quarter.

The proximate causes are well known: the loss of cheap Russian energy, the slowdown in Chinese demand for German machinery, and the failure to invest in digital infrastructure during the years when borrowing was free. But these explain the trigger, not the depth. The deeper problem is structural. German industry was optimised for a world that no longer exists.

The consequences for the rest of Europe are not abstract. Germany absorbs a significant share of Dutch, French, and Polish exports. When German factories slow down, component orders from suppliers across the continent slow with them. The automotive supply chain alone stretches from Bavaria to Braga to Bielsko-Biala.

Berlin has responded with targeted subsidies, a reduced corporate tax proposal, and a great deal of talk about 'transformation.' None of it addresses the core problem, which is that the business model underpinning German prosperity for forty years has broken down, and no replacement has been identified.

Europe built its industrial policy around German demand. Germany built its industrial policy around cheap inputs and open markets. Both assumptions are gone. The reckoning is just beginning.