Germany as the world's biggest exporter is severely hit by the fall in global demand. Exports revenues have been declining by 20 per cent in the first quarter of 2009 on a year-over-year basis. Recovery might be on its way, in August 2009 for the first time since mid 2008 output was growing again. Nevertheless, at a far lower level than the previous year.

The sectors hardest hit were the manufacturing industries such as automobile and machinery. Although public attention focuses on major companies such as Opel, also small and medium enterprises that supply the big trusts are threatened by bankruptcy.

 To counter the crisis, the German government has tied two major stimulus packages and a law to stabilise the financial and banking sector has passed the Parliament. The stimulus packages tied to counter the crisis aim at shoring up domestic demand to make up for the loss in external demand.

 The major measures to counter the crisis in the field of social security are partial unemployment benefits or reduced working hour compensation. This instrument has so far been successful in avoiding full unemployment on a large scale, and has in international comparison received good feedback.

(See the bruegel article on "The good and the bad flexibility")

• Impact of the crisis and challenges to social security systems
• The German crisis responses in general
• Social security responses
• Conclusion

(PDF version)