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 is down 22% from its 2017 peak. Chemical output has fallen for six quarters straight. The Ifo business climate index, which has tracked German corporate sentiment since 1949, hit its lowest reading since the 2008 financial crisis 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 roughly 20% of Dutch exports, 15% of French exports, and 12% of 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 that remains stalled in the Bundestag, 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.