Germany’s leading industry group has warned that the country is facing its “deepest crisis” since the post-war years, urging Chancellor Friedrich Merz’s government to act faster to revive the struggling economy.
Peter Leibinger, president of the Federation of German Industries (BDI), said on Tuesday that Europe’s largest economy was “in free fall” after two years of recession, weighed down by soaring energy prices, collapsing export demand, heavy regulation, and fierce competition from China and the United States.
The BDI now expects German factory output to fall a further two percent in 2025—the fourth year of contraction—as layoffs mount across manufacturing, including at Volkswagen and Bosch. Entrepreneurs blame overregulation and fading innovation culture, warning that Germany’s industrial base is eroding.
Merz says reforms on taxes and power costs will take time to show results. The government forecasts modest growth next year, helped by higher defence and infrastructure spending.
