Germany is experiencing a prolonged recession, being the only EU nation in economic decline for two years. High electricity prices and an aging workforce have driven many companies to closure, surpassing figures from the 2011 crisis. The German Council of Economic Experts forecasts stagnation in 2025, with a modest 1% growth in 2026. Contributing factors include bureaucratic inefficiencies, dependence on cheap Russian gas, disrupted by the Ukraine invasion, and a diminishing competitive edge in global markets. Effective government interventions are anticipated, though recovery is unlikely to be rapid.
The successful German business model of using cheap energy and high engineering skills to manufacture products that are in demand worldwide has been history ever since.
Bureaucratic regulations and lengthy approval procedures are slowing down macroeconomic growth, states the report by the economic experts.
In 2024, more companies closed than in the previous major financial and economic crisis in 2011.
A decisive factor was Russia's invasion of Ukraine in 2022 and the halt to Russian gas supplies.
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