Economic crisis in Germany: trust between politicians and companies is crumbling

Economic crisis in Germany: trust between politicians and companies is crumbling

The economic situation in Germany is tense. High energy prices, dilapidated infrastructure and an acute shortage of skilled workers present companies with enormous challenges. In a current Cicero podcast, Nicole Grünewald, President of the Cologne Chamber of Industry and Commerce, comments on these problems and criticizes the political measures taken so far. She describes the last few years under Angela Merkel's federal government as paralyzing and notes that the current traffic light government has not been successful in tackling these problems. Grünewald emphasizes that the mutual mistrust between politics and business must be eliminated in order to find solutions to the existing economic problems.

The conversation in the Cicero Podcast Economy was recorded on July 7, 2025 and reflects the worrying mood in the German economy. Grünewald particularly criticizes the Merz coalition for several breaches of word that have impaired business confidence in political leadership. She finds that German companies are increasingly perceiving politics as a risk factor for their location.

High energy costs and international competition

A central problem that is affecting companies in Germany is the significant increase in energy costs since the 2019 crisis. These are now around twice as high as they were back then, which leads to a competitive disadvantage in international comparison. Jörg Löbker and Willi Haentjes report that companies in Germany have to compete against companies in Asia and North America, where energy costs are significantly lower.

An example of the challenging situation is Covestro in Dormagen, a global plastics manufacturer with 18,000 employees. Philip Bahke, head of the NRW site association, expresses concern about the high energy costs and the political considerations regarding the exemption from network fees, which are supposed to depend on renewable electricity. Bahke warns of the possible economic consequences of these political measures and asks how deindustrialization in Germany can be avoided in the future.

Lack of skilled workers

Another critical point is the shortage of skilled workers. Rike Svea Johnsen, Managing Director of Kampf GmbH, reports an estimate that there will be a shortage of around three million skilled workers in Germany by 2030. Your company has been producing machines for the film industry since 1920 and urgently needs well-trained engineers and IT experts. While there is a focus on attracting more women to technical careers, challenges remain, particularly when it comes to child care.

For companies like Kampf GmbH, attracting skilled workers is a priority, especially with a view to the federal election, in which those responsible are hoping for greater attention to the compatibility of work and family.

Overcome bureaucratic hurdles

The excessive bureaucratic requirements represent an additional obstacle. Tina Gerfer, Managing Director of Wilhelm Rasch GmbH & Co. KG in Hürth, complains about the time required by the large number of reporting obligations and the Supply Chain Due Diligence Act. She urgently calls for changes in bureaucracy to relieve entrepreneurs of unnecessary administrative tasks and to create more scope for actual business management.

Overall, it is clear that the German economy is in a critical condition. The economy is under pressure due to increasing energy costs, the lack of skilled workers and bureaucratic obstacles. The next federal election could be decisive for future developments in order to finally proactively address these challenges.

For more information about the economic challenges in Germany, read the podcast Cicero and the economic check of the IHK Cologne.