The Journal. Germany’s Economy Is Spiraling. Can War Fix It?
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May 5, 2026 
Bojan Pancevski, a Wall Street Journal reporter covering Europe, unpacks Germany’s dramatic turn from industrial slump to defense production. He explores how car-parts factories could be retooled for weapons. The conversation also touches on energy shocks, Chinese competition, fading pacifism, and why Berlin sees rearmament as an economic gamble.
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Germany’s Stagnation Drags Down All Of Europe
- Germany’s slump matters beyond its borders because much of mainland Europe sits inside German supply chains.
- Bojan Pancevski says the economy has not effectively grown since 2018 after the energy shock and Chinese competition hit manufacturing.
Germany Turned Defense Into Industrial Policy
- Germany’s new growth thesis is to turn idle industrial capacity toward defense, where demand is rising and allies prefer allied suppliers.
- Katharina Reiche pushed a matchmaking platform so firms like screw makers can find drone or weapons customers.
Germany’s Pacifist Taboo Around Weapons Faded
- Germany’s long postwar stigma around arms production has weakened as Russia looks aggressive and U.S. security support looks less reliable.
- Bojan Pancevski says a pacifist country has fundamentally shifted its mentality after Ukraine and America’s retreat from NATO commitments.