A growing chorus of frustration is echoing throughout German industry, with the President of the Federation of German Industries (BDI) warning that the government’s sluggish reform pace is not only fueling economic anxieties but threatening the very foundations of the German social model. Peter Leibinger, in an interview with “Süddeutsche Zeitung”, painted a stark picture of the current mood among business leaders, describing it as “extremely negative, sometimes even aggressively so.
While initial expectations following the government’s formation in May were cautiously optimistic, Leibinger argues that the underlying economic vulnerabilities remain unaddressed. He characterized the prevailing sentiment as a deep and unprecedented disappointment, reflecting a sense that the government is failing to provide tangible progress. “We are in the most severe economic crisis since the founding of the Federal Republic” he stated, citing a prolonged recession, declining production since 2018, stagnant productivity growth and a position as the slowest-growing major economy.
The BDI chief acknowledged the complexity and time required for meaningful reform, conceding that some industry expectations of both the Christian Democratic Union (CDU) and Social Democratic Party (SPD) might have been unrealistic. However, he stressed the urgent need for the government to project a sense of direction and decisiveness. “We need recognizable symbols” Leibinger emphasized, suggesting temporary suspension of burdensome regulations as an example of demonstrating a willingness to act. He believes explaining away such steps with bureaucratic intricacies would be less impactful than the symbolic gesture itself.
Beyond domestic policy failures, Leibinger voiced significant concerns about the intensifying competitive pressure posed by Chinese companies, particularly within Germany’s flagship industries including automotive, chemicals and machinery. He warns that China’s rapid adoption and adaptation of German business models, coupled with cost advantages and greater agility, are eroding Germany’s industrial core. “Our industrial core is indeed in danger because China is replicating our business model, but doing it more cheaply and, above all, much faster”. Leibinger specifically cited bureaucratic hurdles, restrictive labor laws and a lack of flexibility as crippling factors hindering Germany’s competitiveness. He expressed skepticism regarding tariff barriers and protectionist measures, insisting they fail to address the fundamental systemic issues.
Finally, Leibinger unequivocally condemned recent attempts by the Family Businesses Association to engage with the Alternative for Germany (AfD). He asserted that parties founded on polarization and the dissemination of hatred undermine the core principles of Germany’s economic and social model. He declared racism and antisemitism “completely unacceptable” and affirmed his unwillingness to engage with those who harbor such views, underlining a firm commitment to the values underpinning Germany’s democratic society.
