Crisis in the German economy: job cuts and pessimistic forecasts!

The German economy will say goodbye to 2023 in a year of crisis marked by numerous job cuts, bankruptcies and canceled major projects. Reports indicate that the current crisis is seen as more serious than previous economic challenges. The main reason for this is the structural weaknesses of the German location, which are now becoming increasingly obvious.

As the South German newspaper reported, 31 out of 49 business associations rate the current situation worse than last year, according to a survey by the German Economic Institute (IW). The outlook for 2024 is pessimistic: 20 associations expect lower production, while only 16 predict an increase. The prospect and concerns are also great when it comes to employment, as 25 associations expect job cuts, while only 7 expect the number of employees to increase.

Economic prospects

IW director Michael Hüther said that the German economy will also stagnate in 2025. He emphasizes that rising personnel costs, expensive energy and bureaucracy are significantly weakening competitiveness. The uncertain world situation is also inhibiting export activities, while the unclear situation before the federal election in Germany is slowing the willingness to invest.

A study by EY, which is reported in the Deutschlandfunk The report shows an average decline in sales of 4% and a decline in profits of 19% in the first three quarters for the 100 largest listed companies. EY expert Jan Brorhilker emphasizes that many companies are actually shrinking. There is particular concern about the decline in the automotive industry, which is seen as a key growth driver. Since the automotive industry is crucial for Germany as an industrial location, its crisis also affects numerous other sectors.