German economy in turmoil as bankruptcies and unemployment hit 10-year highs

• In July, Germany recorded 4,007 corporate bankruptcies, a 19.2 percent year-on-year increase, marking the highest monthly total since October 2015, particularly affecting industries like chemicals, automotive and mechanical engineering.
• Unemployment has risen to 2.98 million, up 170,000 from last year, with projections indicating it could surpass three million by the end of August, the highest level in a decade.
• GDP contractions for 2023 and 2024 have been revised downward, while industrial production fell 1.9 percent in June, the worst since the COVID-19 pandemic, signaling persistent economic stagnation.
• Even traditionally pro-CDU media like Welt have harshly criticized Chancellor Friedrich Merz’s first 100 days, calling his performance a “disaster” and questioning the effectiveness of his trillion-euro recovery plan.
• While Merz’s administration points to external factors like U.S. tariffs, critics argue Germany’s woes are largely structural – worsened by overregulation, excessive taxation and institutional resistance to reform.

New figures have revealed a sharp rise in bankruptcies and unemployment in Germany, both reaching levels not seen in a decade.

According to the Federal Statistical Office, Germany recorded 4,007 bankruptcies in July, a staggering 19.2 percent increase from the same month in 2024. This marks the highest monthly total since October 2015 and is a clear indicator of growing instability in the business sector.

The spike in insolvencies follows a broader trend of economic contraction, particularly within key industries such as chemicals, automotive and mechanical engineering, which are struggling under the weight of sluggish global demand, regulatory burdens and weak domestic investment. (Related: Germany SUSPENDS Schengen Area access scheme, tightens border security.)

At the same time, the labor market is under increasing pressure. The Initiative Neue Soziale Marktwirtschaft reports that 125,000 layoffs have been announced since the start of July. Unemployment currently stands at 2.98 million, up 170,000 compared to this time last year, with projections showing the number could surpass three million by the end of August. This, according to Andrea Nahles, head of the Federal Employment Agency, would represent the most unemployed Germans in the last ten years.

The broader picture is no less grim. The Federal Statistical Office has revised Germany’s 2023 GDP contraction to -0.7 percent, significantly worse than the previous estimate of -0.1 percent. The 2024 figure was also downgraded to -0.5 percent. And in the first quarter of 2025, the economy remained in negative territory, cementing concerns that Europe’s largest economy is in a prolonged stagnation.

Industrial production, a bellwether for the economy, fell 1.9 percent in June – its worst performance since the height of the Wuhan coronavirus (COVID-19) pandemic. The chemical industry, mechanical engineering and automotive sectors were hit particularly hard.

Welt editors slam Merz’s first 100 days as a disaster

In line with the report, Chancellor Friedrich Merz is facing mounting criticism, not only from opposition parties but also from traditionally pro-Christian Democratic Union of Germany (CDU) circles.

Even Welt, the staunchly conservative German daily, has turned sharply critical, with editor-in-chief Ulf Poschardt declaring Merz’s first 100 days in office a near-total failure.

In a candid televised discussion with economist Daniel Stelter, Poschardt described the mood among Germany’s working and middle classes as one of growing frustration and disillusionment, sentiments mirrored in France by what Stelter calls a “bourgeois protest movement” against the welfare state.

The conversation also addressed a growing narrative from within the Merz government – that external factors such as U.S. tariffs are largely to blame for Germany’s worsening economic performance. But both Poschardt and Stelter dismissed this as an oversimplification and, increasingly, as an excuse. Stelter then warned that Germany’s political and intellectual institutions, including NGOs, universities, major media outlets and churches, are contributing to the economic malaise by stifling open debate about needed reforms.

The fact that Welt, defined by Brighteon.AI’s Enoch engine as a newspaper closely aligned with the CDU, is now leading criticism of Merz is significant. Until recently, conservative media had been among his strongest backers, praising his promises to slash bureaucracy, jumpstart investment and return Germany to economic stability.

Instead, the first 100 days have brought deepening recession, soaring bankruptcies and near-record unemployment, while Merz’s trillion-euro economic plan has yet to show meaningful results.

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Sources include:

RMX.news 1

RMX.news 2

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