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The German economy: Is Europe’s economic flagship falling apart?

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Germany’s Green Economy Minister Robert Habeck issued an unusual warning last month. If Ukraine’s gas transit agreement with Russia was not extended after it expires at the end of next year, Germany would be forced to reduce or even shut down its industrial capacity.

Also deputy chancellor, Habeck delivered the stark warning at an economic conference in eastern Germany. The venue was significant: The Alternative for Germany (AfD) seemed to be in the lead among eastern voters, and one of the main things that attracted voters to the party was the fact that the ‘German economic miracle’ had not really worked there. According to Habeck, policymakers should avoid ‘making the same mistake again’ by assuming that the economy would not be affected without measures to secure energy supplies.

Growth data: Alarm bells ring in the manufacturing sector

It is widely accepted that Germany, Europe’s number one economically, is in a difficult situation due to the war in Ukraine, sanctions against Russia, the energy crisis and ‘protectionist’ policies in the US.

For example, the German economy has technically been in recession for two quarters consecutively. According to data released today (July 24), the German Composite PMI Manufacturing Index declined for the third consecutive month, falling to 48.3 from 50.6 in June. The index entered the contraction zone below 50 for the first time since January. Manufacturing production levels fell at the fastest pace since May 2020 as demand for goods fell sharply.

The service sector also lost momentum, with growth hitting a five-month low. Across the sector, new business declined again, leading to the sharpest drop in total new business inflows in more than three years. Customer hesitancy, destocking, high inflation and rising interest rates are cited as factors contributing to the decline in demand for both goods and services.

The pace of job growth across the private sector in Germany slowed significantly in July and the overall rate of job creation was the weakest in almost two and a half years. Hiring slowed in the service sector, while payrolls in the manufacturing sector fell marginally.

The unemployment rate is likely to continue to rise as manufacturing employment declined and the service sector reduced hiring. Moreover, the service sector experienced an increase in input and output prices in July, postponing hopes for a rapid slowdown in inflation until next spring. The manufacturing sector, on the other hand, saw a moderation in the increase in input costs.

Industry lobby pessimistic

It is clear that German industrialists are making the most noise in the debate on ‘deindustrialization’ in Germany.

The Federation of German Industries (BDI), for example, says that not only large companies but also SMEs are planning to move some of their operations outside Germany.

“Many businesses headquartered in Germany are doing well globally, but they are struggling with operations at home,” BDI President Siegfried Russwurm told CNBC, citing “bureaucracy and slow management” as additional pressures companies face in the current climate. Russwurm said that the German economy will also be flat in 2023, with his country ‘lagging behind’ if global GDP grows by 2.3 percent.

Automotive sector shrinks

Things are not going well in the automotive sector, perhaps Germany’s most important industry.

The sector has shrunk significantly compared to the pre-COVID-19 period. According to data cited by Handelsblatt, Volkswagen, Audi, BMW and Mercedes-Benz alone produced half a million fewer passenger cars on their continent between January and May 2023 compared to the same period in 2019. This corresponds to a decline of almost 20 percent.

COVID-19 lockdowns and a shortage of semiconductors and wiring harnesses had slowed car production between 2020 and 2022. At that time, demand exceeded supply, and manufacturers were able to charge high prices and compensate for production losses with the help of short-term pandemic allowances.

After the pandemic, supply chains were now considered to be largely intact. The industry therefore expected a strong rebound in production for 2023. However, the latest data suggests that this expectation was too optimistic.

Chinese competition throws Germans off balance

The rapid entry of China, the new player in the automotive sector, into the European market is also worrying Germany. Last October, a deal made by the German car rental company Sixt worried the Germans: Sixt signed a deal not with a European or German company, but with the Chinese carmaker BYD to buy 100,000 electric cars in the coming years.

News that Chinese carmakers such as BYD and NIO have started selling their vehicles in European markets has raised questions about the future of German manufacturers. Last May, for example, Germany’s largest tabloid, BILD, headlined “Chinese cars flood Europe,” referring to the rapidly growing market shares of the new suppliers.

There are no German companies among the top 10 companies dominating the electric car market in China. The share of German companies in the world’s largest automotive market is still 19 percent, but when it comes to electric vehicles, it is around 5 percent.

In fact, a survey conducted by the Association of German Engineers (VDI) and published on May 25 revealed that 55% of Germans do not think that “the best cars will still come out of Germany in 10 or 15 years”.

Only 12% said they thought this was definitely the case, while 33% said they believed it was likely but not certain.

The gap between inward and outward investment is widening

A decline in manufacturing, slowing consumer spending and weak export growth, combined with high inflation and rising borrowing costs, have caused the German economy to shrink in the last two quarters.

Added to this are investment problems. Citing OECD data, the Cologne-based German Economic Institute said the gap between German companies’ outward investment and inward business investment in 2022 will be the largest on record.

Germany’s ability to attract business investment fell sharply last year. More than 135 billion euros in foreign direct investment (FDI) went abroad, while only 10.5 billion euros came into the country.

The institute’s report says that 70 percent of German companies’ outward investments went to other European countries, making “the collapse of investment in European neighbors particularly worrying. According to the Institute, many of Germany’s problems are related to its own internal failures: high corporate taxes, excessive bureaucracy and poor infrastructure. We note for the moment that these findings are perfectly in line with the criticisms coming from Europe’s ‘libertarian’ right-wing movements.

US ‘declaration of war’

The warnings of a politician belonging to the Greens, one of the most prominent defenders of American interests in Germany, may seem strange, but Habeck’s warnings did not stop with his words at the beginning of this article.

“[Americans] want to own semiconductors, they want the solar industry, they want the hydrogen industry, they want electrolyzers,” he told a conference in June, and said of the government subsidies the Biden administration has introduced under the Inflation Reduction Act (IRA), “It’s like a declaration of war.”

If the Financial Times (FT) is to be believed, calls for retaliation against the US are growing in Germany. A senior German official told the FT, “People came to the WTO. So I said: we are in the middle of a war. Now is not the time to fight with our biggest ally,” he told the FT.

‘Deindustrialization’ or ‘recalibration’?

When it comes to ‘green transformation’ and ‘independence from China and Russia’, it is inevitable that the Euro-Atlantic world, led by the US, will make a political move.

There is a major restructuring going hand in hand with monopolization: The unity of state-economy is being reinforced and the lines between capital and the state are blurring.

German Green Minister Habeck made this point very clearly at the BDI Industry Day conference: “In my view, Germany is an attractive location for both new and existing companies. Of course, the materials industries are under pressure as a result of high energy prices, but there are political decisions to be made.”

At this point in the world capitalist system, we are once again entering a period of intensified ‘political economy’. Statements by US National Security Advisor Jake Sullivan and European Central Bank President Christine Lagarde have signaled that a global economic policy dependent on ‘geopolitical’ goals is on the horizon.

Germany is part of this world and the implementer of a series of political decisions ranging from ‘green transformation’ to ‘de-risking’. Indeed, initial anger at the US IRA has given way to ‘keeping up’. The EU, Japan and South Korea have introduced subsidies for the technology and clean energy sectors to attract new investment or prevent more companies from moving to the US. “If we don’t keep up, they will have [key sectors] and we won’t,” Habeck said. That’s the bitter truth,” Habeck said, suggesting that even an acceptance is accompanied by ambition. Both German monopolies and foreign companies with manufacturing investments in Germany are warning Berlin and Brussels to create an alternative to the IRA. The new stage of monopoly-state integration does not necessarily entail ‘deindustrialization’: ‘traditional’ industries are declining, while ‘new-green’ industries are growing with state subsidies. Gunter Erfurt, CEO of Meyer Burger, a Swiss solar technology company with three factories in eastern Germany, praised the IRA and its subsidies for clean technology companies, saying: “Unlike us Europeans, Americans have realized that solar technology is not just a commodity that you can buy from a random supplier at the best price, it risks becoming a plaything of geopolitics. Everyone needs it for the energy transition.”

Indeed, in May, Swedish battery maker Northvolt committed to building its next factory in Germany after Berlin pledged to pour hundreds of millions of euros into the project. The US and the IRA almost won this race. But Berlin managed to hold on to the Swedish giant with the Temporary Crisis and Transition Framework (TCTF), which turned out to be not so temporary after all. The TCTF framework is now also being used to help solar companies. At the end of June, Habeck’s ministry asked for declarations of intent for a new subsidy program for companies planning to manufacture solar modules or components or process the critical raw materials needed to make them.

Also in May, the German government announced plans to set aside about 4 billion euros ($4.4 billion) each year to subsidize electricity prices for energy-intensive industries in an effort to protect some businesses from high costs. Habeck says they want to keep industry in Germany, and the electricity subsidies are aimed at that.

German companies can profit from ‘green transformation’

German central bank governor Joachim Nagel also said on April 13 that Germany’s energy crisis was ‘more or less solved’ and that the country had the ‘inner strength’ to recover from the double shock of the pandemic and the war in Ukraine.

“German industry has a good capacity to deal with the situation … and I believe they will overcome it and get back to the levels we saw before the pandemic,” Nagel said.

What’s more, Europe’s ‘green tech’ exports, while still behind China, are still ahead of the US. Germany, too, appears to be on its way to catching up with the US (its global export market share of ‘low carbon technologies’ is around 12 percent, compared to around 14 percent in the US). It should also be noted that German companies entering the US market stand to gain.

We should especially note the comfort of machine builders and equipment manufacturers. New factories are being built all over the US thanks to IRA subsidies. It is very difficult to build a factory in North America without European equipment and especially German machinery.

One of the beneficiaries is ebm-papst, a manufacturer of motors and ventilation systems based in Mulfingen in southwest Germany. The IRA has boosted demand for the company’s cooling fans for electric vehicle chargers and megapack battery storage systems.

“The IRA is an opportunity for everyone,” says Mark Shiring, CEO of the Americas for ebm-papst’s Air Technology Division. His company is poised to benefit from the planned rollout of high-speed electric vehicle chargers across the US.

German financial power ready for incentives

Germany and Europe are lagging behind the United States in this regard, but the expansion of subsidy schemes and the loosening of bureaucracy are likely, especially in a country as financially strong and export-dependent as Germany. US chip giant Intel has announced plans to invest 17 billion euros in two new factories in the eastern German city of Magdeburg. The German government had promised to subsidize the project to the tune of €6.8 billion. Intel then asked for more, citing high energy costs. And it got what it asked for: The government agreed to increase the subsidy level to 9.9 billion euros, and Intel announced that it was increasing its investment volume from 17 billion euros to 30 billion euros.

Before the 2000s, Germany was already being called the ‘sick man of Europe’ because of low growth rates and high unemployment. It is clear that part of the clamor for ‘deindustrialization’ or ‘economic decline’ comes from the ‘left-behind’ sectors of capital. Moreover, with the war in Ukraine, the German defense sector has received a significant infusion of blood. Both arms companies and their related industries have been enjoying unprecedented share rallies since February 2022. The EU’s efforts to reorganize its economy according to the war will also accelerate the integration of some monopolies into the state and show that for them ‘deindustrialization’ is not a reality at all.

Those who can be dismissed

For example, Ingeborg Neumann, President of the German Textile Industry Association, said in his speech at the BDI event, “Energy costs, labor shortages, bureaucracy; it is no longer attractive for us to produce in Germany.” First, the share of textiles in the German economy has been declining since 1998. While the sector is still an important source of employment, it could be discarded or outsourced to other nearby countries, for example in Central and Eastern Europe. Second, the problems listed by the sector representative can somehow be solved or mitigated: Re-establishing ties with Russia; attracting migrant labor; restructuring the state to make it easier for capital; new incentives for export markets… Moreover, the fact that export-oriented manufacturers are struggling should not prevent us from seeing the bigger picture: while the German economy has struggled recently, the Dax index, the country’s 40 largest listed companies, has risen by 20% in the past year to an all-time high. The German economy is still dominated by the services sector and this divergence between services and manufacturing is expected to continue.

Chemical conglomerates like BASF are making losses and scaling back their German operations, that’s true. But the divergence itself does not necessarily mean that ‘the economy is doing badly’. For example, Maria Ferraro, Chief Financial Officer at Siemens Energy, said, “We are now seeing a revival in the market with real momentum. We have an overflowing order book,” she said. Spending on R&D is fourth in the world, behind the US, China and Japan. According to the World Patent Office, about a third of all European patents come from Germany. Much of the innovation power is embedded in large companies such as Siemens and Volkswagen and focused on well-established industries. The following sectors stand out in patent applications respectively: Transportation; Electrical machinery, equipment, energy; measurement; mechanical components; computer technology. Compared to other G7 partners, Germany is still a country where the manufacturing industry plays an important role. Bloomberg also points this out in an analysis and points out that the giant German banks still ‘dwarf’ those on Wall Street. The combined market capitalization of Deutsche Bank and Commerzbank is less than a tenth of that of JPMorgan!

The German problem and the AfD

Almost 20 years ago, Germany overcame its reputation as the ‘sick man of Europe’ with an ambitious package of ‘labor market reforms’ that ushered in a period of sustained prosperity, driven by strong demand for its machinery and automobiles, especially from China. Germany exported far more than it bought. Now, the ‘divergence’ from Russia and China signals a new situation. The rise of the AfD can also be explained by the difficulty of ‘exporting Germany’ in adapting to the new world. From the creation of new economic zones within the EU to the ‘controlled dismantling’ of the EU, there are a number of policy proposals to overcome the difficulties on the establishment front. SMEs, the Mittelstand, an important component of the German economy, are the biggest bearers of the cry of ‘deindustrialization’. We will analyze the AfD phenomenon from this perspective in the next article.

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German carmakers face historical crisis as Chinese competition and market contraction erode profits

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03/08/2026

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The German automotive industry is enduring a severe period of distress, driven by intensifying competition from Chinese vehicle manufacturers and an increasingly overheated domestic market in China.

For decades, China served as the primary engine that propelled German carmakers into global titans, yielding robust sales and billions in profits. Today, that historic reliance has transformed into their heaviest liability.

According to an analysis published by Politico, domestic Chinese manufacturers—having spent decades observing, learning, and investing—are now producing better-equipped electric vehicles at prices lower than those offered by Volkswagen, BMW, and Mercedes-Benz.

At the same time, China’s automotive market—the largest in the world—has become severely overheated and contracted by a fifth this year. The sharp downturn has forced both domestic and foreign automakers into a ruthless battle for survival.

The tangible impact of this pressure became clear this month as German carmakers reported their half-year financial results, disclosing billions of dollars in losses alongside announcements of widespread layoffs and plant closures across Europe.

“The environment has never been as challenging as the one we face today,” Oliver Blume, Chief Executive Officer of the Volkswagen Group, told investors. “Looking ahead, the risks before us are steadily mounting.”

The structural distress within the auto sector delivers another blow to Germany’s already struggling economy. It also presents a escalating political predicament for Chancellor Friedrich Merz’s fragile coalition ahead of critical state elections this autumn.

Dismantled dreams in the automotive sector

Since the 1980s, China had functioned as the primary engine of high profit margins for German automakers.

To gain access to a vast and rapidly expanding consumer market, carmakers were required by Beijing to establish joint ventures with local partners.

For decades, that arrangement proved highly lucrative, delivering massive returns to shareholders.

However, in the post-pandemic era, Chinese companies rapidly outpaced their German rivals in electric vehicle technology, which gained swift adoption across China.

While German brands long enjoyed high prestige among Chinese consumers, buyers have swiftly shifted toward domestic manufacturers offering superior technology at lower price points.

“They are suffering massive losses in China and may no longer be able to recover there,” said Pedro Pacheco, an automotive analyst at the consulting firm Gartner.

Chronic problems spread beyond China into Germany

The fallout is increasingly being felt inside manufacturing plants within Germany itself, rather than remaining confined to China.

BMW announced this week that it will eliminate 8,000 jobs across Germany by the end of 2027, with severance payments set to begin in October.

Mercedes-Benz is asking its workforce to extend weekly working hours from 35 to 40 hours for the same pay.

Meanwhile, industry flagship Volkswagen is locked in negotiations with labor unions over plans to lay off 100,000 workers and shut down domestic factories.

This severe downturn is providing political momentum to the Alternative for Germany (AfD) party, which is gaining traction in national polls.

The party is leveraging the auto sector’s decline and job losses to launch sharp attacks on the government.

“Even major industrial pillars like Volkswagen, Porsche, or Infineon are recording historic drops in profits and planning hundreds of thousands of layoffs in the coming years,” AfD co-leader Alice Weidel said this week. “This demonstrates how far the deindustrialization of our business hub has truly advanced.”

Merz and his governing coalition will get an initial indication of how these cutbacks resonate with voters during state elections this autumn in Saxony-Anhalt and Mecklenburg-Western Pomerania, both of which are strongholds for the AfD in eastern Germany.

Chinese vehicles begin to dominate European market

While automakers continue to perform well in North America and Europe, the collapse of sales in China is eroding overall profits.

Facing fierce domestic competition and systemic overcapacity at home, Chinese carmakers are exporting vehicles in record volumes.

Europe has emerged as their primary target market: China now sells more vehicles in Europe than Germany sells in China.

European consumers are enthusiastically embracing these imports. According to the latest data from the automotive industry association ACEA, sales of Chinese-made cars in the European Union surged by 63% in the first half of this year, rising from 338,000 units in 2025 to roughly 549,000 units in 2026.

That figure now represents nearly 10% of total European automobile sales.

Although German car companies carry an unparalleled exposure to China, even manufacturers with no operational footprint there, such as Renault, are feeling the severe impact of rising Chinese vehicle sales in Europe.

Automotive analyst Matthias Schmidt noted that the influx of inexpensive Chinese vehicles featuring advanced technology has put pressure on Renault and its budget brand, Dacia.

Renault disclosed on Thursday that sales of its Dacia brand fell by 8% year-on-year in the first half of 2026.

European firms forced into cooperation with Chinese rivals

The European Commission attempted to intervene by imposing tariffs on Chinese-made electric vehicles following an anti-subsidy investigation, but the added costs have done little to stem the inflow.

The tariffs do not apply to plug-in hybrid vehicles, leaving a lucrative loop-hole for Chinese manufacturers to exploit.

These shifting dynamics are driving several European automakers to forge direct partnerships with Chinese competitors.

Stellantis, the Franco-Italian-American conglomerate, established a joint venture with Chinese manufacturer Leapmotor. According to ACEA data, Leapmotor’s European sales surged from just 7,701 units in the first half of 2025 to 48,261 units during the same period this year.

Volkswagen CEO Blume hinted that his company could pursue a similar path, telling investors the carmaker might begin manufacturing certain models in Europe that were originally developed in China for European consumers.

Olaf Lies, Minister-President of Lower Saxony—a major shareholder in Volkswagen—said earlier this summer that it would be a strategic error for the automaker to isolate itself from China’s technological advancements.

“Our objective should not be to isolate technological developments from one another,” Lies stated.

However, Schmidt warned that such a strategy carries significant risks for the German brand’s equity.

He noted that these vehicles would effectively remain Chinese-engineered cars bearing a VW badge, a dynamic that could prompt consumers to buy the cheaper Chinese-branded versions directly.

Accelerating the search for new markets

European automakers are also attempting to offset losses by pursuing growth in emerging markets.

“North America, India, and the Global South represent our growth engines for tomorrow,” Blume told investors during a briefing.

Yet Chinese manufacturers have already established a commanding presence in those regions, dominating electric vehicle sales across Southeast Asia and Latin America.

Under heavy pressure, European automakers are also attempting to monetize their mass-production expertise by capturing a share of rising global defense spending.

Blume told investors that Volkswagen is engaged in “very advanced discussions” with a defense contractor, adding that he expects “a decision to be made within this year.”

However, portions of the workforce, particularly in Germany, remain hesitant about associating the company with the arms industry.

Furthermore, the move carries a serious risk of retaliation from Beijing. Earlier this month, China imposed export restrictions on 14 defense and technology firms, including German defense giant Rheinmetall.

While those measures were presented as retaliation against export curbs targeting Chinese entities, automotive companies entering the defense sector could find themselves exposed to similar actions.

“European carmakers must act very, very carefully because this is not just a quick gain,” Pacheco warned. “It may look like one, but once you step onto that chessboard, you need to know how to play chess.”

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Morawiecki launches Rozwój Plus movement following high-profile split from Poland’s PiS

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31/07/2026

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The first major event organized by the political circle of Mateusz Morawiecki, following his split from Law and Justice (PiS), is set to take place in Warsaw’s Praga district.

The gathering comes just days after the former prime minister and dozens of his allies severed ties with the national-conservative PiS.

The move also led to Morawiecki’s resignation from the presidency of the European Conservatives and Reformists (ECR) group in the European Parliament.

Organized by his Rozwój Plus (Development Plus) movement, the conference—dubbed “Morawiecki’s barbecue” due to the prominent inclusion of charcoal-grilled kiełbasa sausages—will mark a significant moment in Polish conservative politics.

The event will bring together key figures from the emerging movement alongside featured guests, including former world chess champion Garry Kasparov and General Rajmund Andrzejczak, the former chief of the General Staff of the Polish Armed Forces.

The gathering will offer Morawiecki’s camp an opportunity to present a political vision distinct from that of the current PiS leadership.

“Poles care about the fight for a strong Poland, their wallets, their jobs, housing, development, identity, culture, the Christian faith, and the defense of the cross hanging in the Sejm,” Morawiecki said this week. “These are our principles; this is our faith.”

Discussions will focus on demographics, security, and the politics of memory—topics that have grown increasingly sensitive amid recent tensions in Polish-Ukrainian relations.

While Morawiecki describes Rozwój Plus as an “expert group and think tank,” its political ambitions are becoming increasingly clear.

A new parliamentary group established on Wednesday brings together 40 deputies and one senator, providing his allies with an official platform in parliament and a base from which to challenge PiS.

“This is a threat to us,” Mateusz Kurzejewski, a PiS politician and spokesperson for Przemysław Czarnek’s prime ministerial campaign, told Euractiv. “After all, this is an initiative that reduces our chances of victory, though it does not eliminate them entirely. Therefore, we will continue to work hard.”

However, whether Morawiecki can successfully reshape the Polish right remains uncertain.

An SW Research poll commissioned by Onet revealed that 32.9% of respondents would consider voting for a party led by the former prime minister.

The strongest potential support comes from voters who already align with the right. Among respondents currently close to PiS, 14% said they would consider supporting Morawiecki, while 7.1% of those aligned with the further-right Confederation held the same view.

The initiative could also draw limited support from the ruling camp. Approximately 7.4% of voters currently supporting Prime Minister Donald Tusk’s pro-EU Civic Coalition, The Left, Poland 2050, or the Polish People’s Party indicated they would not rule out voting for a party led by Morawiecki.

Sources within Tusk’s government believe the split in PiS could benefit the ruling coalition in the short term.

“Particularly because this situation helps soften the impact of the hospital scandal,” one source told Euractiv. “Today, no one is talking about it anymore, and fortunately, no new statements have been made.”

The controversy revolves around allegations that a Warsaw hospital operated a preferential admission system for politicians belonging to the governing Civic Coalition, allowing them to enter a VIP lounge and receive medical treatment ahead of other patients.

Questions have also been raised regarding the salary of the doctor heading the hospital’s emergency department, who is reportedly linked to Tusk’s party.

Yet the same source warned that Morawiecki’s departure may have little long-term impact on the Civic Coalition.

They argued that PiS possesses a fiercely loyal electorate, whereas enthusiasm for Rozwój Plus could prove temporary.

“Look at the IBRiS poll for Rzeczpospolita,” another source said. “70% of PiS voters say they are voting for their ideal party. This core electorate accounts for about 70% of PiS’s current voters.”

A similar perspective prevails within PiS, where politicians contend that Morawiecki is chasing a voter base that may be too small to sustain a new party.

Speaking to Euractiv, Kurzejewski said:

“People do not want to vote for politicians who have been excluded from PiS. As for Law and Justice voters, they do not want to vote for those who betrayed them. That is why this project means Rozwój Plus will fail to clear the electoral threshold.”

Today’s event will therefore serve as an early test of whether Morawiecki can translate curiosity and institutional support into lasting political clout—or whether his departure will become merely another short-lived fracture on Poland’s crowded right wing.

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Ceuta migration crisis sparks diplomatic row as Italy demands Spain’s suspension from Schengen

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31/07/2026

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An influx of thousands of migrants entering Spain from neighboring Morocco has plunged the autonomous enclave of Ceuta into chaos since Wednesday, prompting fresh backlash against Prime Minister Pedro Sánchez’s immigration policies.

Local authorities warned on Wednesday that an increasing number of migrants were reaching Ceuta by sea.

Juan Jesús Vivas, the president of Ceuta, told reporters that the situation constituted “an absolute humanitarian and social emergency” and demanded that the central government take action.

The situation escalated further on Thursday as thousands of people entered Ceuta by land and sea, overwhelming reception centers.

Videos shared online showed individuals using wetsuits and life jackets to swim to shore.

In a statement posted Thursday on X, Sánchez announced that he was working with Moroccan authorities to restore order as quickly as possible and promised an immediate response.

The border chaos erupted just weeks after the Spanish Supreme Court issued a ruling preventing the direct deportation of migrants arriving by sea.

Sánchez’s political rivals laid the blame for the crisis directly on the prime minister. Santiago Abascal, leader of the right-wing Vox party, characterized the events as an “invasion,” while Alberto Núñez Feijóo, leader of the center-right People’s Party (PP), was also among those condemning the prime minister.

The developments drew additional criticism from anti-immigration figures across Europe, including Alice Weidel, co-leader of Alternative for Germany (AfD), and Manfred Weber, chairman of the European People’s Party (EPP), the largest group in the European Parliament.

“This proves one thing: the Migration Pact and return regulations must be put into force today, not tomorrow. Furthermore, Frontex must be strengthened,” Weber wrote.

Tensions have remained high in Spain since the Sánchez administration launched a program enabling undocumented migrants to apply for legal status and remain in the country. More than one million people have applied under the scheme.

This represents the most severe border crisis to hit Ceuta since 2021, when at least 8,000 people entered the territory from Morocco.

The autonomous Spanish cities of Ceuta and Melilla are the only EU territories sharing a land border with Africa.

Italian leaders demand Spain’s expulsion from Schengen

Meanwhile, the fiercest reaction to the migration crisis in Spain emerged from Italy. Top Italian politicians demanded that Spain be expelled from the Schengen Area as tensions continued to escalate.

Italian Prime Minister Giorgia Meloni said in a statement on X: “The images coming from Ceuta are shocking and demonstrate once again that uncontrolled illegal migration poses a real threat to the security of Europe’s borders.”

Meloni added that Italy was prepared to act, “including through extraordinary measures,” to protect its borders and guarantee the safety of its citizens.

Together with Deputy Prime Minister Matteo Salvini and Foreign Minister Antonio Tajani—the most senior ministers representing parties in the Italian right-wing coalition—Meloni demanded the suspension of the Schengen Agreement or the exclusion of Spain from the border-free zone.

Under the accord, individuals can travel freely between 29 signatory European countries.

However, several member states have reinstated checks at certain borders, as permitted under the agreement, citing migration risks.

Italy had previously temporarily reintroduced controls on its border with Slovenia to prevent smuggling and terrorism.

Tajani went beyond calling for Spain’s exclusion from Schengen, attributing responsibility for the events in Ceuta to the immigration policies of Spanish Prime Minister Pedro Sánchez, who had promised to legalize hundreds of thousands of undocumented migrants.

The minister characterized the policy as “profoundly wrong” and claimed it provided “an incentive for human trafficking.”

The remarks provoked a sharp reaction from Spanish Foreign Minister José Manuel Albares, who summoned the Italian ambassador to account for Tajani’s statements.

Replying to Tajani on X, the Spanish minister wrote: “This message is unbefitting the foreign minister of a partner and friendly country from whom we expect European solidarity, not partisan demagogy.”

Separately, European Commissioner for Migration Magnus Brunner, who is also an EPP member, stated that the European Commission supports Spain in protecting the integrity of its borders, including Ceuta, and is in contact with Spanish Interior Minister Fernando Grande-Marlaska regarding the matter.

A spokesperson stated that the Commission welcomed “the close cooperation established between Morocco and Spain to combat these migratory flows and to ensure the swift return of individuals who entered Ceuta illegally, in accordance with applicable rules.”

“When it comes to our cooperation with partner countries, Morocco is a key and reliable partner for the EU. In recent years, we have intensified our cooperation in the areas of migration and border management, as well as the fight against smuggling. We are currently working to turn our relations into a comprehensive and strategic partnership,” the spokesperson added.

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