German Industry President Warns Economy in 'Free Fall,' Urges Urgent Reforms

Industry Leader Sounds Alarm on German Economy

Peter Leibinger, President of the Federation of German Industries (BDI), issued a stark warning today regarding the state of the German economy, declaring it to be 'in free fall.' Leibinger stated that the country is experiencing its 'deepest crisis' since the founding of the Federal Republic, and some reports suggest even since World War II. He criticized the federal government's response as lacking sufficient decisiveness to address the severe economic downturn.

The BDI's assessment highlights a critical period for Europe's largest economy, which is grappling with what Leibinger described as a 'structural decline,' rather than a mere temporary economic dip.

Key Economic Indicators and Challenges

According to the BDI, the industrial sector is expected to suffer a 'dramatic decline by the end of 2025.' The organization projects a 2 percent decrease in industrial production for the current year, which would mark the fourth consecutive year of declining industrial output. Overall, the BDI anticipates Germany's economic output to decline by 0.1 percent in 2025, positioning Germany as one of the laggards compared to projected growth in the eurozone and global economy.

Several factors contribute to this challenging economic landscape:

• High energy costs burdening manufacturers.
• Weak demand for German exports in key markets.
• The emergence of China as an industrial rival.
• US tariffs.
• Excessive bureaucracy and regulatory burdens.
• A persistent skilled worker shortage.

Specific industries are feeling significant pressure. The chemical industry, for instance, is reportedly operating at only 70 percent capacity utilization. The mechanical engineering and steel industries are also under strain. While the construction sector appears to be stabilizing and the automotive industry expects a production increase, employment in the automotive sector remains under pressure.

Calls for Decisive Government Action

Leibinger urged the government to implement a 'turnaround in economic policy' with clear priorities focused on competitiveness and growth. He emphasized the necessity of decisive structural reforms to prevent further job losses and a decline in living standards.

The BDI President called for specific measures, including:

• Prioritizing investment over consumer spending.
• Transparent use of special funds to support additional capital investments.
• Broad bureaucratic relief for companies.

Leibinger warned that 'every month without decisive structural reforms costs further jobs and prosperity and massively restricts the state's future room for maneuver.'