Germany’s economy is suffering its “deepest crisis” since the aftermath of World War II, an industry group has warned, calling on Chancellor Friedrich Merz’s government to take urgent action to spark a revival.
Europe’s largest economy “is in free fall, but the federal government is not responding decisively enough”, Peter Leibinger, president of the Federation of German Industries (BDI), said on Tuesday.
Germany is facing a perfect storm: high energy costs burdening manufacturers, weak demand for its exports in key markets, the emergence of China as an industrial rival and the US tariff onslaught.
It has suffered two years of recession and is forecast to eke out just meagre growth in 2025.
The conservative Merz, who took power in May, has pledged to revive the eurozone’s traditional powerhouse, including through a public spending blitz on defence and infrastructure.
But industry leaders are increasingly voicing frustration that the efforts are moving too slowly and are insufficient to tackle a host of deep-rooted problems, from chronic labour shortages to heavy bureaucratic burdens.
“The economy is experiencing its deepest crisis since the founding of the federal republic, yet the federal government is not responding with sufficient determination,” said Leibinger.
“Germany now needs an economic policy turnaround with clear priorities for competitiveness and growth,” he added, warning that “decisive structural reforms” were urgently needed to arrest the decline.
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