The German economy is going through „the deepest crisis” since the war, warns the Federation of German Industries (BDI), accusing the government led by Friedrich Merz of not reacting to a prolonged industrial decline.
Industrial production is expected to decrease in 2025 for the fourth consecutive year, and BDI says the situation is no longer a conjunctural accident, but a „structural decline.”
Germany's Gross Domestic Product (GDP) is expected to stagnate in 2025, after two years of recession, while the government seems unable to find convincing solutions to restore business confidence. "The German economy is in free fall, yet the government is not reacting decisively," denounces BDI President Peter Leibinger, according to AFP.
The Federation also criticizes the slow pace of reforms promised by Merz, in a context where the German economic model - built on strong exports, leading industry, and cheap Russian energy - is eroding due to the pandemic, energy price spikes, Chinese competition, and now, tariffs imposed by US President Donald Trump.
Industry representatives complain about suffocating bureaucracy and excessive regulations. "We have too many regulatory requirements," says Brian Fürderer, director of Microqore Medical, who believes that product certification and launch take "far too long." Additionally, Germany remains "dependent on foreign brands" in strategic areas such as artificial intelligence and software.
Although Merz claims to have initiated reforms - from reducing corporate taxes to changes in electricity tariffs - industrialists say the pace is insufficient. "Every month without resolved structural reforms will cost even more jobs," warns BDI.
The industrial decline is already visible in numbers. The automotive industry has lost 6.3% of employees in the last year, nearly 49,000 jobs, and metallurgy has lost 2.6% in just one year and over 11% since 2019. Volkswagen plans to eliminate 35,000 positions by 2030. At the same time, the Federation of Chemical and Pharmaceutical Industries warns that chemical production has dropped to the lowest level in the last three decades.
One of the few sectors doing well is the defense industry, supported by massive investments and considered an "economic lifeline." However, unions are trying to temper the tone. "The situation is undoubtedly serious, but apart from defense, sectors such as aerospace, medical technology, railway industry, and energy technology are doing very well," says the vice president of IG Metall.