Over a quarter of industrial businesses in Germany experience a decline in competitiveness
German industrial companies are facing significant competitive challenges in the global market, according to a survey published by the Ifo Institute on Tuesday, July 2025. The survey revealed that one in four German industrial firms reported a decline in competitiveness compared to countries outside the EU, with the proportion slightly decreasing within the EU.
The key challenges identified include high energy prices, extensive regulation, and poor investment conditions, which create structural disadvantages for German industry. The mechanical engineering sector has been hit hardest, with the proportion of companies reporting declining competitiveness rising sharply from 22.2% to 31.9%. The electrical and electronics sector also faces increasing competitive pressure. However, there has been some improvement in the automotive industry, with fewer companies reporting a loss in competitiveness, decreasing from 33.0% to 16.1%.
Another crucial obstacle is the 15% tariff imposed by the U.S. on EU goods, a result of a recent tariff dispute provisional agreement. This tariff creates a structural surcharge and puts German companies at a disadvantage compared to American competitors who benefit from tariff-free access to the EU market. It remains uncertain whether new trade relations will sufficiently offset these costs.
Klaus Wohlrabe, head of Ifo surveys, expressed concerns about the challenges for German industry in international competition. He stated that the industry is struggling with structural disadvantages such as energy prices, regulation, and investment conditions. No industrial sector has seen an improvement in competitiveness recently.
These factors collectively contribute to an ongoing loss of global competitiveness for German industry. The survey results highlight the need for policy interventions to address these challenges and support the competitiveness of German industrial companies in the global market.
[1] Ifo Institute (2025). Ifo Survey on the Competitiveness of German Industrial Companies, July 2025. [2] Ifo Institute (2025). Ifo Business Climate Index, July 2025. [3] Ifo Institute (2025). Ifo Export Index, July 2025. [4] Ifo Institute (2025). Ifo Institute Survey on the German Economy, April 2025.
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