This is presented as one of Dönitz's more coherent decisions as naval chief. Eliminating the surface threat would have freed Allied battleships, carriers, and other major units for different theatres or more anti-submarine work. Italy's approaching collapse made that danger more urgent because another major Axis surface fleet was also disappearing. The argument is not that the German surface fleet could win the war, but that it imposed a useful allocation problem on the Allies.
Notable Point · 2:43:59-2:45:36
Why Dönitz kept the surface fleet afloat
Dönitz resisted sacrificing the German surface fleet because its existence tied down Allied capital ships that might otherwise hunt U-boats.