Germany is experiencing a recession marked by two consecutive years of economic decline, primarily driven by high electricity costs impacting energy-intensive industries, a shortage of specialized workers, and excessive bureaucratic hurdles. The country saw more business closures in 2024 than during the 2011 financial crisis. The German Council of Economic Experts warns of a 'considerable sluggishness' with zero growth expected in 2025 and only slight recovery anticipated for 2026, largely due to the lost competitive edge following the Ukraine conflict and rising production costs.
The German economy has become less competitive due to multiple factors, including high energy prices, an ageing workforce, and a complex bureaucratic environment.
Experts predict that Germany's economy will face a prolonged stagnation with zero growth projected for 2025 and only a slight recovery anticipated for 2026.
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