German business warns economy nearing ‘tipping point’

In a joint statement released ahead of a summit at the International Craft Fair in Munich, the Federation of German Employers’ Associations, the Federation of German Industries, the German Chamber of Commerce and Industry and the Confederation of Skilled Crafts said Germany’s economic position was under pressure ‘as rarely before in the post-war period’.

The groups said business conditions had deteriorated sharply. While the German economy had long been able to withstand these challenges, three consecutive years without growth suggest its resilience is eroding.

The associations called for comprehensive structural reforms to the welfare system, including financing non-insurance benefits entirely through tax revenues. They also urged pension reforms this year to curb rising costs, including raising the retirement age and removing incentives for early retirement, both politically controversial proposals.

For businesses, the groups demanded faster tax relief, less bureaucracy and lower energy costs, specifically calling for a reduction in electricity taxes for companies.

While acknowledging that the government had introduced some measures during its first year in office, the associations said the steps were insufficient and warned that delaying reforms would make eventual adjustments far more painful.

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