Workers' Radiation Safety Proposal Solicited from Commission for Regulatory Measures
In recent times, Germany has been grappling with a surge in business failures and increasing unemployment rates. This trend, evident in 2025, can be attributed to a combination of factors, including energy policy failures, geopolitical tensions, and economic setbacks.
One of the key causes is the struggle in Germany's transition to a low-carbon economy, also known as the Energiewende. The country's heavy reliance on Russian gas has created vulnerabilities, particularly after the Ukraine conflict, affecting industrial energy costs and economic stability.
Geopolitical and foreign policy complications have also played a significant role. Controversies surrounding foreign investments, such as the partial sale of Hamburg's port terminal to a Chinese company, reflect ongoing political uncertainty that may hamper economic confidence and investment.
Germany's underperformance in green finance and climate policy funding is another contributing factor. The country is likely to miss its international climate finance targets and its national budget shows stagnation in funds for climate policy, limiting investments in sustainable industries and innovation.
The renewable energy sector has also faced challenges, as evidenced by the failure to attract bids for major offshore wind projects, which could slow down energy security and increase costs for businesses.
Moreover, German efforts to mitigate US tariffs on steel and aluminum have failed, potentially raising costs for manufacturers and contributing to sector struggles.
These factors have resulted in increased operational costs, reduced investments, and created economic uncertainty, leading to the rise in business failures and growing unemployment in Germany during 2025.
After 100 days in office, the economic assessment of the Merz government is harsh, with economist Veronika Grimm warning that wage-related costs could rise to 45% by the end of the legislative period. The component for predicting unemployment is slightly negative at 99.6 points, but has risen by more than three points since March, representing a 171,000 increase from July 2024.
However, there are signs of a possible turning point. The Institute for Employment Research (IAB) expects more than three million unemployed in August, but also sees signs of a potential recovery. Thorsten Alsleben, CEO of the Initiative New Social Market Economy, predicts that the threshold of three million unemployed will be exceeded for the first time this month.
In the midst of these challenges, experts like Weber, a labor market researcher at the IAB, are calling for a change of course, particularly in the industry sector. They suggest investments in future infrastructure, state procurement that fosters competition and innovation, better conditions for start-ups, and the abolition of outdated subsidies. Meanwhile, Marie-Christine Ostermann, president of the Family Entrepreneurs Association, calls for an economic shift towards investments and growth instead of higher social contributions and additional bureaucracy.
As the situation unfolds, it is crucial for stakeholders to stay informed and engage in dialogue to navigate these challenging times. If you have feedback or questions, we invite you to write to us at letters@our website.
- The struggles in transitioning to a low-carbon economy, such as the Energiewende, have been of a kind used in recent business failures in Germany, as the country's heavy reliance on Russian gas and the failure to attract bids for major offshore wind projects have increased operational costs and economic instability.
- In the industry sector, experts like Weber are advocating for changes, such as investments in future infrastructure, state procurement that fosters innovation, better conditions for start-ups, and the abolition of outdated subsidies, as these measures could help businesses and reduce unemployment.
- Beyond domestic issues, geopolitical and foreign policy complications, such as controversies surrounding foreign investments and the failure to mitigate US tariffs on steel and aluminum, have also had a significant impact on finance, business, and even politics in Germany, contributing to economic uncertainty and increasing unemployment rates.
