Germany could be facing the longest economic crisis in its post-Second World War history.

According to a report by the Handelsblatt Research Institute (HRI), Germany may enter its third consecutive year of economic recession in 2025, marking its longest economic crisis since the end of the Second World War. Germany, the largest economy in the European Union, could shrink by 0.1% this year, following contractions of 0.3% in both 2024 and 2023.

„The German economy is in the midst of the largest crisis in its post-war history. Due to the pandemic, the energy crisis, and inflation, Germans have, on average, become poorer,”

– said Bert Rurup, the chief economist of HRI. The German central bank has reached a similar conclusion, lowering its 2025 growth forecast to 0.2% in December, down from the 1.1% predicted in June. Surveys suggest that German citizens are most concerned about the economy ahead of the early elections on 23 February.

The dismal economic performance does not bode well for Economy Minister Robert Habeck, who holds a degree in philosophy and is the Green Party’s candidate for Chancellor in the upcoming elections. Some have joked that if Mr. Habeck were Chancellor, Germany would soon be in need of economic assistance.

As highlighted by V4NA in an earlier article, nearly a quarter more corporate bankruptcies were reported in 2024 than in 2023, with 22,400 companies declaring insolvency – the highest number since 2015. The number of consumer bankruptcies also rose by 8.5%, reaching just over 72,000. Meanwhile, Allianz Trade, a credit insurer, is expecting even more bankruptcies in 2025, including a further increase in consumer bankruptcies.

In terms of layoffs, the manufacturing and construction sectors have been the hardest hit. While the HRI report indicates that employment rose slightly last year to 46.1 million, the institute now predicts a monthly reduction of about 10,000 jobs in the coming months.

The HRI sees no signs of a recovery in consumer spending, as inflation continues to erode disposable income despite gradually rising real wages. A December survey by Ipsos revealed that only 38% of Germans believe the country is on the right track.