The German economy is struggling with many problems. That is why the Grimm economist expects that the number of unemployed could increase in 2025. The manufacturing sector is particularly affected.
Economist Veronika Grimm expects a slight increase in unemployment in Germany in 2025. “Jobs are being cut, particularly in the manufacturing sector,” Grimm told the Bild newspaper. The established industries in which Germany was a global leader are under pressure, she added. Not everyone will be able to keep their current job. Since companies are also looking for skilled workers at the same time, unemployment will only increase slightly, but not drastically, Grimm explained.
However, many employees would not be able to maintain their wage levels if they changed jobs. “Many will bring home less money,” explained the economics professor, who has been a member of the Federal Government’s Advisory Council since 2020.
Demand for investment
In view of the economic development and economic expectations for the coming year, Grimm is also calling for an economic program to stimulate investment in Germany. “Where, for example, factory closures are planned, politicians should help ensure that new companies are set up,” she demanded. It is also important to support structural change in the economy.
State coordination of further training offerings would be an option if employees change companies or industries.
Economics Grimm calls for an economic program to stimulate investment.
Grimm also criticized what she considered to be too close proximity between politics and business, which had led to sluggishness and a lack of willingness to change in companies.
2.774 million unemployed
In Germany, 2.774 million people were registered as unemployed in November, 17,000 fewer than in October. Seasonally adjusted, however, this corresponded to an increase of 7,000 unemployed people. Compared to November last year, the number of unemployed was 168,000 higher, according to the Federal Employment Agency.
There is plenty of headwind for the German economy: China has lost momentum as a growth driver on global markets, and the number of company bankruptcies is increasing domestically. At the same time, the export prospects for the industry are bleak, comparatively high energy prices and bureaucracy are putting a strain on Germany as a location.
Hardly any recovery in the coming year
The federal government expects the gross domestic product to shrink slightly in 2024 for the second year in a row and only grow by 1.1 percent in 2025. Economists, on the other hand, expect only 0.4 percent growth in the coming year. Economists are all the more committed to reforms.
“Germany is in a painfully long phase of stagnation,” said DekaBank economist Andreas Scheuerle. The structural problems will remain a problem “until politicians dare to make the big (reform) throw”.
Donald Trump's election victory and his inauguration next year pose additional challenges for the German economy. ING economist Carsten Brzeski said: “German growth prospects will depend heavily on the new government's ability to strengthen the domestic economy in the face of a possible trade war and even stricter industrial policy in the US.”
Trump had threatened to increase tariffs on imports from Europe. This would particularly affect the export-oriented German economy.
