Despite big promises from the ruling government, German Chancellor Friedrich Merz’s economy is overseeing an economy increasingly in shambles, with bankruptcies jumping 20 percent in July and unemployment reaching just shy of 3 million, with both figures representing 10-year highs.
The level of bankruptcies in July have not been so high since October, with district courts counting 4,007 bankruptcies, a 19.2 percent increase compared to July of the previous year, announced the Federal Statistical Office. Bild indicates that this represents a 10-year high.
Unemployment soars
The unemployment situation is also worsening. The Initiative Neue Soziale Marktwirtschaft indicates that 125,000 layoffs have been announced since July 1, and unemployment stands at 2.98 million, which is an increase of 170,000 compared to a year ago.
Federal Employment Agency head Andrea Nahles expects the 3 million mark to be surpassed in August, which would represent the most unemployed Germans in the last ten years.
Economic output falls sharply
The Federal Statistical Office also revised down economic output from previous yeas. In 2023, the figures were revised down to -0.7 percent compared to -0.1 percent. In 2024, output was revised to -0.5 percent from -0.2 percent. Now, in 2025 in the first quarter, Germany is still seeing negative growth.
Industrial production fell by 1.9 percent in June – to its lowest level since the coronavirus pandemic. Particularly affected were the chemical, mechanical engineering, and automotive industries.
All of this comes after Merz promised a turnaround in the summer after winning office.
“I want us to feel this summer: Things are slowly changing for the better. We’re making progress.” Merz said in his first government statement on May 14.
CEOs seem to rate Merz’s first 100 days poorly
Merz unleashed nearly a trillion euros in debt to ensure this turnaround, and promised reduced bureaucracy and tax relief. This included billions for infrastructure and defense, which was supposed to jumpstart the German economy.
However, a report from Bild indicates that without serious reforms, Germany’s economic situation will continue to deteriorate. In fact, there are already signs that the situation is growing worse.
Belén Garijo, CEO of pharmaceutical giant Merck, told Bild that “politicians must create the right framework. We must become more proactive: smarter bureaucracy, fewer concerns, but more agility and more courage.”
The CEO added, “Either Europe adapts to current realities or it risks sacrificing its industrial leadership – for overregulation and stagnation.”
Clemens Fuest, the president of the ifo Institute, also told Bild: “Individual measures don’t achieve much; what’s needed is a comprehensive and well-thought-out reform concept that must be designed across departments.”
He is calling for deregulation in the capital markets, more financing for startups, streamlined tax law, and digitization of government administration.
Wolfgang Große Entrup, head of the German Chemical Industry Association (VCI), also called for the government to quickly enact real reform.
“Use the second 100 days for real reforms. Cut the paperwork madness by 25 percent. Now. The country continues to falter. The world isn’t waiting for us,” he said.
Big disappointment in the CDU
In many circles, including pro-CDU circles, Merz is quickly being seen as a disaster, but there are hopes he can somehow change course. The pro-CDU Welt newspaper has been trashing his performance. In a recent discussion between Welt editor Ulf Poschardt and Daniel Stelter, they rated Merz’s first 100 days as highly negative.
Poschardt first points to France, where he says similar rage has been building from those who are working. He asks Stelter, “A bourgeois protest movement against the welfare state has emerged in France: ‘Nicolas qui paie.’ How do you perceive that?”
Stelter responds: “Translated, this means something like ‘Nicolas pays the bill.’ Nicolas was the most common given name in France in the 80s – the German equivalent would be Christian, Sebastian, Julia or Stefanie. The idea behind this is that the middle-aged man or woman works diligently and pays for the pensioners and the social welfare recipients. This can be applied to Germany. Here too, the middle class pays, the redistributive state takes money away, and the burden is enormous. Nicolas feels this in France, and Christian and Julia feel it the same way in Germany.”
Poschardt points out that many apologists for Merz and the ruling government are pointing to tariffs as the issue, but the structural issues have been taking place for years. In many ways, tariffs are being used as a scapegoat.
“We have anti-performance taxation of labor in our country. That has to go… Germany’s industrial production is at its lowest point since 2020. The Department of Economic Affairs justifies part of the problem with US tariffs. But the weak growth is also structural. The NGOs, media, universities and churches prevents a sensible economic policy discussion,” he said.
A new Forsa survey shows that 62 percent of Germans fear the economy will continue to decline. Meanwhile, the Alternative for Germany (AfD) continues to strengthen in the polls, often with arguments that it can vastly improve the economic situation in Germany. In some polls, the party is rated as the most popular in the entire country.
The traditional parties have responded with ban threats against the party
