The German mechanical engineering sector will experience a profound crisis of confidence in 2025. Numerous companies will lose faith in the political leadership as the business climate deteriorates once again and key reform initiatives fail to materialize. Furthermore, bureaucracy is paralyzing many businesses, while innovation is less frequently originating in Germany. This mixture of frustration and growing anger is increasingly directed at Berlin, as confidence in a stable business environment dwindles and the call for genuine renewal grows louder. (welt: 11.12.25)
Trust as the Foundation of a Functioning Industrial Hub
At the beginning of this legislative period, many business leaders spoke of a new beginning. Today, disillusionment prevails. The government is struggling to reach compromises, but in the mechanical engineering sector, the impression is growing that key reforms are stalled. This not only damages trust but also erodes belief in a sustainable economic strategy. At the same time, the region’s attractiveness as a business location is declining because more companies are relocating their research abroad. Bureaucracy is consuming resources, innovation is stagnating, and the business environment is becoming increasingly unattractive.
The anger is directed primarily at labor market and tax policies. High burdens are putting a strain on investment. As a result, companies see less room for innovation and new developments. The association speaks openly of political failure because renewal is urgently needed. More and more companies doubt that Berlin understands the scale of the crisis. The business environment is also deteriorating, as new regulations are frequently imposed without removing existing obstacles.
Escalating anger at the political leadership team
The statements made by Federal Labor Minister Bas are particularly hard on the industry. Her attacks on entrepreneurs are creating distrust instead of trust. Many companies report deep resentment, as such words are widening existing divides. Businesses are demanding pragmatic reforms and less red tape. But instead of relief, the pressure is increasing. The planned law on adherence to collective bargaining agreements will increase precisely the bureaucracy that companies have been criticizing for years. Innovation is suffering because time and capital are being spent on paperwork instead of technology.
At the same time, the economy is deteriorating. Production is declining again. Numerous companies are using short-time work to retain skilled workers. Demographic change is further intensifying the pressure. The association is therefore calling for structural reform and clear decisions to restore trust and confidence. However, many business owners now doubt that a political course correction is possible.
Historical Parallels and Looming Structural Breakdown
VDMA President Kawlath sees parallels to the recession of the 1990s. Capacities are significantly below normal levels. The weak business environment is further exacerbating the situation. Innovation is stifled because companies are suffering from rising costs. The combination of bureaucracy, a lack of modernization, and ever-changing regulations is creating pressure that is further eroding trust.
At the same time, companies are struggling with trade barriers from the USA. Two-thirds of companies expect revenue declines. The association is calling for clear political signals, but from the perspective of many companies, Berlin is showing too little assertiveness. This is damaging not only trust but also faith in the government’s active role in international competition.
Fragile Prospects Despite Minimal Growth Effect
A slight statistical base effect is generating minimal growth, but at its core, there is a lack of dynamism. The industry is demanding far-reaching reforms and a reduction in administrative burdens so that innovation can once again flourish. Only then will renewed trust be possible. Without decisive modernization, the business location faces a long-term loss of substance, which many entrepreneurs fear. Trust in political leadership is therefore at a historic low.