Germany, one in three companies lost competitiveness in non-EU markets

The paradigm shift is also reflected in the analyses of other economic institutes and is one of the structural factors of the country's crisis, which, excluding the post-Covid rebound, has not grown significantly since 2018. In 2025, goods exports fell by 0.7 per cent, marking the third consecutive year of decline. In contrast, imports of goods increased by 5.1%, driven by machinery and electrical equipment.

The government's maxi-spending plans, with hundreds of billions coming in for infrastructure and defence, will only partly improve the situation. In order to boost German competitiveness, business associations and economists are asking the government led by Friedrich Merz for structural reforms, measures to lower the cost of energy and the streamlining of bureaucracy. All actually in the programme of the Executive, which only took office in May and recently announced measures in these directions, e.g. with concessions for energy-intensive companies and plans for the simplification and digitalisation of the public administration.

Recently, there has also been a debate on working hours and part-time work, to limit their use. A controversial solution, which Merz likes and which is supported by Economy Minister Katherina Reiche, but which finds resistance even in the chancellor's party (the Cdu-Csu), not to mention the coalition partners of the SPD and the trade unions. In these quarters, it is pointed out that the decline in competitiveness is mainly due to declining investment and lost ground in technology, international competition and weak demand. Without investment, more hours worked do not translate into a competitive advantage.