A wave of pessimism has swept over German businesses as only 14% of companies express optimism about economic improvement in 2025, according to a survey conducted by Atradius. With 32% anticipating a worsening economic climate and 54% expecting no change, the outlook suggests turbulent times ahead for Germany’s economy. Atradius Germany’s CEO, Frank Liebold, forecasts a challenging year: “We expect around 25% more insolvencies in 2025.” Rising Insolvency Risk Nearly 30% of surveyed businesses report high insolvency risks in their industries, with only 17% considering their sectors low-risk. The construction, automotive, and energy-intensive industries, including steel, paper, and chemicals, are particularly vulnerable. “Zombie companies that survived on pandemic-era loans are now beginning to fail,” Liebold stated. In 2024, corporate bankruptcies rose to 22,400 cases, up from 18,020 in 2023, and this trend is expected to worsen. Liebold also warns of the potential for deindustrialization, noting that declines in German production could have a domino effect across other industries. “Well-paid jobs in sectors like automotive are at risk, which would reduce consumer spending and weaken the broader economy,” he added. Cautious Optimism on Employment Despite the grim economic forecasts, only 6.7% of companies plan to reduce their workforce in 2025, while 32.1% expect to hire new staff. Nearly 75% of businesses surveyed plan to maintain current employment levels. This cautious optimism reflects a focus on workforce stability, even amid economic uncertainty. Business Demands for Political Action The Atradius survey reveals mounting frustration among German businesses, with 82% calling for reduced bureaucracy, 73% advocating for lower energy costs, and 61% demanding tax breaks. Political stability remains a priority for 54% of respondents. Businesses argue that Germany’s regulatory framework, including measures like the Supply Chain Act and Packaging Directive, burdens their ability to focus on core operations. “Sustainability and climate protection are essential, but they should be pursued from a position of economic strength,” Liebold emphasized. Companies also urge the government to tackle the skills shortage, reduce social security contributions, and foster innovation through investment incentives. Economic Drivers and European Momentum While German companies see limited internal drivers for economic growth in 2025, they are more optimistic about European markets. Forty-one percent of respondents believe most economic momentum will come from Europe, with Asia, particularly China, accounting for 26% and 14%, respectively. Only 17% expect North America to drive economic recovery. Setting the Right Course Germany has a track record of resilience in the face of crises, but businesses now look to policymakers for decisive action. “We have the ability to move forward again,” Liebold concluded, “but we need the right course to be set to unlock our potential.” Survey Details: The Atradius survey was conducted in late November 2024, sampling over 470 businesses across industries such as automotive, construction, chemicals, IT, consumer goods, and more. Respondents represented companies ranging from under €5 million to over €1 billion in annual revenue and employed between fewer than 100 to more than 1,500 staff.