German industry in crisis: competitiveness is falling dramatically!

German industry in crisis: competitiveness is falling dramatically!

The competitiveness of German industry remains a central issue, which is further illuminated by a current survey by the ifo Institute. On August 12, 2025, around one in four industrial companies reported a decline in their competitiveness compared to countries outside the EU in July. According to [zeit.de] report that this value remained unchanged high compared to the previous survey in April.

The challenges are varied. Klaus Wohlrabe, head of ifo surveys, emphasizes that German industry is struggling with structural disadvantages. These include, among other things, rising energy prices, strict regulatory requirements and unfavorable investment conditions. These aspects have a negative impact on the industry and mean that there has been no significant improvement in competitiveness in any industry.

Particularly affected: mechanical engineering and the electrical industry

The survey shows that the problems particularly affect mechanical engineering. The proportion of companies reporting declining competitiveness rose alarmingly from 22.2 percent to 31.9 percent. This is the highest value ever measured in this sector. Competitive pressure is also growing in the electrical industry, which is further exacerbating the situation.

In contrast, companies in the automotive industry have significantly improved their situation. The proportion of companies that assess their competitive position negatively almost halved from 33.0 percent to 16.1 percent. This positive trend could indicate adjustments to current market conditions.

International challenges and future perspectives

The German economy is also facing additional external burdens, particularly from tariffs in the USA, which could further impact competitiveness. Wohlrabe makes it clear that the challenges for German industry in international competition remain enormous. German companies currently have to expect a structural premium of 15 percent compared to their US competitors. It remains unclear whether new trade relationships can compensate for these structural disadvantages.

Overall, the current situation illustrates how important it is for German industry to face the challenges and develop strategies to strengthen competitiveness. The next few months are therefore crucial in order to initiate positive developments and keep up with international competition. The survey results make it clear that a comprehensive analysis and possible reforms are necessary to counteract the stagnating situation.

For more information, you can find the survey results directly on the [ifo] website.