Germany’s economy is in a state of crisis, according to the country’s leading industrial lobby, the BDI. With growth expected to contract in 2025, business leaders are urging the government to address issues like energy prices, an uncompetitive export market, and a broken economic model. Without swift measures, experts warn that Germany’s status as Europe’s economic powerhouse could be at risk. Read in detail what’s happening in the country.
Germany, long Europe’s economic powerhouse, is now facing a severe downturn. The Bundesverband der Deutschen Industrie (BDI) warns that industrial output is shrinking and growth is expected to contract in 2025. Business leaders are urging immediate government action on energy prices, exports, and labour markets.
The BDI describes the situation as a ‘deep’ crisis, stressing that Germany is struggling to maintain its competitive edge. Manufacturing and exports, once economic pillars, are underperforming. A weakening export market, high energy costs, and supply chain disruptions are worsening the situation, with China’s slowdown adding to the strain.
Energy prices remain a key issue. Germany’s reliance on Russian energy collapsed after the Ukraine war, driving costs higher. Transitioning to alternative sources has been slow, leaving energy-intensive industries like chemicals and manufacturing struggling to stay afloat.
Labour costs are another concern. Productivity growth has slowed while wages rise, making businesses less competitive. A shrinking workforce due to an ageing population is exacerbating the problem. Business leaders are calling for government measures to address these demographic shifts.
The BDI is pushing for industrial reforms, greater investment in digital infrastructure, and support for AI and renewable energy. Business leaders want lower taxes and reduced regulations, arguing that bureaucracy is stifling innovation and investment.
Chancellor Olaf Scholz’s government faces increasing pressure to act. Critics argue it has failed to tackle structural economic issues. The opposition has seized on the crisis, making it a key political battleground ahead of the next election.
Germany is at a crossroads. Without urgent reforms, it risks losing its position as Europe’s economic leader. The coming months will be crucial in determining whether the government can stabilise the economy and restore growth.
