A dark cloud is gathering over Germany’s business landscape. Forecasts predict that up to 42,000 companies will collapse next year—the highest tally since 2011—placing as many as 340,000 jobs directly at risk and piling up an estimated €48 billion in liabilities, according to official data and projections.
The warning signs are already flashing. From January through May, authorities recorded 22,340 corporate insolvencies, a 40.3% surge over the same period in 2024. May alone saw more than 3,200 filings, a monthly record. Small and medium-sized enterprises—those with 20 to 250 employees—account for roughly 62% of the cases, underlining the heavy toll on the Mittelstand.
The gloomy outlook is echoed by the Ifo Institute’s
The contradictory signals are puzzling. The Ifo business climate index actually nudged up to 85.6 points in June, driven by hopes of easing geopolitical tensions and lower uncertainty, according to Ifo president Clemens Fuest. Yet those optimistic vibes have not reached personnel departments, where caution prevails.
Structural shifts are compounding the weakness. In automotive engineering services, employment has shrunk dramatically—from 90,000 in 2019 to between 50,000 and 60,000 today. Berlin-based IAV, a major player, has cut hundreds of jobs at one location, citing cost pressure and offshoring. Other industries are also tightening belts:
- DocMorris is replacing 100 full-time positions with artificial intelligence, targeting annual savings of at least 15 million Swiss francs from the end of 2027.
- Coca-Cola Europacific Partners will close five German sites in 2025, including in Cologne and Berlin-Hohenschönhausen, eliminating 505 jobs as tasks are relocated.
Regional data paint a mixed picture. In Bavaria, Economy Minister Hubert Aiwanger described the situation as “clouded” on June 25, noting that insolvencies in the state rose 11% to 15,000 cases. The local unemployment rate has climbed above 4%. Aiwanger called for more high-tech investment and automation to counter the trend. For eastern Germany, the Ifo Dresden institute forecasts modest GDP growth of just 0.7% in 2026, while employment is still expected to shrink by 0.4%—partly due to elevated energy costs.
Even the renewable-energy sector, a traditional job engine, faces new risks. The Bertelsmann Foundation warns that planned legislative changes—such as the upcoming EEG amendment and stricter rules on building modernization—could threaten thousands of positions in solar, wind, and heat-pump industries. The sector had expanded its workforce to 436,000 by 2025, but policy reversals may stall further growth.
