For over a decade, Germany has been proud of its role as a bulwark of economic and social stability on a European continent plagued by the sovereign debt crisis and Brexit. However, the mercantilist growth model that has made the country the "world champion of exports" is increasingly backfiring as the US attempts to balance its current account deficit and China rises as a formidable competitor in high-value-added products, rather than just as a supplier and customer. In this article, we show why the increasingly visible cracks in Germany’s infrastructure, caused by years of austerity, are linked to its export-oriented economy, and weigh the arguments for and against successful reform.

• Germany’s once-admired mercantilist model is increasingly under pressure from US tariffs and rising Chinese competition in its core industries.

• At the same time, austerity-driven neglect has left Germany’s infrastructure, and public services in a worrying state, which is increasingly hampering the country’s competitiveness.

• The recently elected government under Merz is attempting to tackle the problem with a comprehensive government investment programme, which has contributed to a rally on the stock markets.

• Our article shows how government underinvestment and export surpluses are in fact two sides of the same coin, and examines whether Germany can stage a comeback in the today’s hostile economic and geopolitical environment