Remember when Germany was known for its cars? Not anymore, German vehicle production has fallen by 31% since 2015, the steepest drop among major producers, while China’s has risen by more than 40%. The same pattern appears elsewhere. Machinery and plant engineering remain well below earlier peaks as Chinese rivals close the technology gap and undercut on price. Chemicals, the classic early-warning sector, have seen multi-year output declines, with capacity utilization stuck around 70–75% amid rising pressure from Chinese overcapacity. Energy-intensive industry overall remains roughly 15% below 2018–2022 levels. The old German model of high-quality engineering and reliable exports is under structural strain. High energy and labor costs, stagnant productivity, dense regulation, and years of complacency have eroded competitiveness, while adaptation to electrification and software has lagged. What has expanded is the public sector. Employment in government, education, and health has grown even as manufacturing and private jobs have shrunk. Aggregate growth since 2020 has come almost entirely from higher public consumption and investment, financed by rising debt, private-sector contributions have been negative. This is not sustainable. Without lower energy and regulatory costs and genuine pressure to innovate, the relative decline of Germany’s industrial core will continue. Higher debt masks the decline for now, but Germany without its industry won’t stay prosperous forever.

This chart illustrates Germany’s structural economic decline compared with its peers really well. Industrial production is down roughly 11% since 2015 (about 15% from the 2018 peak), with sharp losses in manufacturing, energy-intensive sectors, autos, and machinery. Public investment is up over 20%, and public/near-public employment has surged by hundreds of thousands of jobs since 2023, while the private sector has shed jobs. The private sector has subtracted from growth, only state consumption and investment prevented outright contraction. By contrast, Poland’s industrial production rose 54% and Switzerland’s 36% over the same period, reflecting competitive cost structures, investment, and (in Switzerland’s case) high-value sectors rather than deindustrialization. Public spending can temporarily paper over weakness but cannot replace a shrinking productive base. Without deep structural reforms addressing regulations, bureaucracy, and overtaxation, Germany won’t remain prosperous forever. Unfortunately nothing is happening, and the current government has just increased taxes for entrepreneurs throttling growth potential and innovation even further.