Amid deteriorating economic conditions, Finance Minister Lars Klingbeil announced new reforms planned for completion by the end of 2025. He reported this to the Funke Media Group.
Economic Situation in Germany
Germany's economy shrank by 0.3% in the second quarter of 2025, significantly worse than the initial estimate of -0.1%. Contributing factors to the downturn include weak manufacturing, declining household spending, and reduced investments. The Federal Statistical Office reported that household consumption dropped to 0.1%, linked to poor performance in food and hospitality sectors.
Government Measures
Lars Klingbeil stated that the government is prepared to take active measures and intends to make 'important decisions' in key areas like healthcare and pensions. He also emphasized the need to reduce bureaucracy to facilitate business operations.
Impact of Tariffs and Global Factors
Tariffs imposed by the U.S. have negatively impacted Germany's exports. Economist Carsten Brzeski noted that recent corporate reports indicate the effects of these tariffs and structural changes on company outcomes. Germany exports about 10% of its goods to the U.S., and any changes in this regard will be felt in the country's economy.
Thus, Germany is facing significant challenges in economic policy and reforms, necessitating adaptation to global changes and internal issues.
