Submitted by Thomas Kolbe

The German Chamber of Industry and Commerce (DIHK) sees the German economy in a prolonged phase of deindustrialization. Together with the Federation of German Industries (BDI), the chamber reiterates calls for far-reaching reforms to boost growth and investment. Yet both associations still shy away from touching the golden calf of the green transformation.

Germany’s economic crisis continues into the new year without interruption. A survey conducted by the DIHK among 23,000 member companies found that only one in six firms expects an economic upswing in 2026.

Twenty-five percent of companies are planning further job cuts, and only one third intend to make growth investments. For DIHK President Helena Melnikov, the situation is dramatic. If policymakers fail to act decisively, Germany faces a further massive loss of value creation and jobs, Melnikov warns. As before, the DIHK locates the core of the economic decline in German industry. According to chamber calculations, the sector has shed around 400,000 jobs since 2019.

This weighs particularly heavily because these positions are typically well-paid and highly skilled. Their value creation reverberates throughout Germany’s economic structure—among industry-related services, regional trade, and ultimately public finances.

As a result, municipal treasurers in industrial crisis hubs are increasingly confronted with insoluble challenges amid growing budget deficits. In cities such as Stuttgart, Erlangen, Wolfsburg, and elsewhere, business tax revenues are now visibly shrinking.

Reality Denied

Existing reforms are failing to reach companies, Melnikov warns, pointing to high labor and energy costs. The BDI likewise called 2026 a “year of reforms” in comments to Reuters.

All of this is correct. And yet the question remains why leading figures of German business still lack the courage to openly criticize government policy and finally bury the visibly failed project of greening German society.

We are witnessing a monumental failure of the economic elite—if it can even still be called that. The deindustrialization diagnosed by Melnikov is simply denied by large parts of the mainstream press as well as by policymakers. And yet the numbers speak clearly.

It is not yet fully clear how large capital outflows were last year. In 2024, net direct investment outflows amounted to €64.5 billion; in 2023 they exceeded €100 billion. Previous years were likewise marked by sustained capital flight.

Those who can are heading for the exits—fleeing green regulatory policy, high fiscal burdens, and the economic devastation inflicted on companies by Germany’s energy transition.

Calls for sweeping reductions in bureaucracy also naturally feature on the list of location weaknesses. A perennial political evergreen—and a hollow demand in light of the massively increased pace of state intervention. The state will have to create tens of thousands of new public-sector jobs, at its development banks such as KfW and the state banks, in order to weave the flood of cheap credit into the arteries of the economy.

On massive state intervention, business prefers to remain silent. Companies take what they can get. There is no talk of criticizing market distortions or the systematic crowding-out of the private sector from capital markets by the state.

For the current year, the DIHK expects officially reported GDP growth of 0.7 percent. However, this figure includes net new public borrowing—including special funds—of around 5.5 percent, with a state share exceeding 50 percent of GDP. The private sector, by contrast, is likely to shrink by roughly four percent.

Political room for maneuver is narrowing. Flight to the capital markets appears to be the last remaining way to buy time and maintain the illusion of social and economic stability through ever new subsidy programs.

Location Patriotism Meets Reality

And before the first patriotic crocodile tears are shed: every plant manager, CEO, capital-rich fund, individual investor, and family office will have carefully weighed its judgment on the destructive political framework conditions in Germany and the EU—and will not turn away from the location without reason.

Insisting on location patriotism, after decades of deliberate erosion of patriotic sentiment, German traditions, and culture by the political apparatus and its associated media empire, is at best infantilizing—more bluntly put: cynical.

Federal Chancellor Friedrich Merz and his finance minister Lars Klingbeil, for their part, have not hesitated in the past to play the patriotism card more or less openly when it came to the accelerating departure of German companies.

In October, Klingbeil, in a display of helplessness, publicly called on business at the IGBC trade union congress in Hanover to commit to the location and safeguard jobs.

A cheap media stunt, as Klingbeil is fully aware that energy-intensive production can no longer be defended at the German location, and that the policy of green transformation deliberately and systematically pushes industrial production abroad—or increasingly into insolvency.

The narrative of a lack of loyalty to the location is now firmly established. It shows that politics has already identified its scapegoats—entrepreneurs and investors who are to be publicly blamed for the country’s economic decline. They are henceforth portrayed as irresponsible profiteers abandoning employees, society, and the community in the pursuit of supposed profit maximization.

The depth of the ongoing recession and the now unmistakable deindustrialization of the country make it increasingly likely, week by week, that a point of no return—an economic tipping point—has already been crossed.

German society is therefore left with essentially two options. Either it falls for the rhetorical tricks of the central planners around Friedrich Merz and Lars Klingbeil, accepts further nationalization and the construction of centrally planned artificial economies such as a war economy or a leaden eco-industry. Or it eventually broadens its horizon, returns to the principles of the free market economy, and accepts the social pain that any genuine transformation for the better must necessarily entail at the outset.

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About the author: Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.