Since the beginning of the 1990s, Germany has been by far the largest economy in the European Union and since 2002 and the Eurozone. According to Eurostat data, in 2025 German GDP accounted for 25.99% of the Eurozone GDP and 21.27% of that of the European Union and was 42.65% greater than that of France, 70.15% greater than Italy and 130.24% greater than Spain. It is obvious that it is the dominant European economy and it is reasonable to overly influence the economic performance of the whole EU. and, even more, the Eurozone.
When the German economic machine is working efficiently, the rest of the European Union also benefits and when things are not going well, it is also paid by the others. For many years after German reunification, the heavy burden of the absorption of former East Germany has kept German growth very low and for years Germany has been called by the rest of the Europeans «Europe's big patient». Things have changed gradually and since the mid-2000s the German machine began working very well and pulling up and the rest of Europe.
But the times are filming and, as can be seen from official statistics, the German economic and industrial locomotive has again given way to an anaemic economy that is unable to develop, keeping low and European growth. Looking at Eurostat's data this seems very clear. In 2025 EU GDP increased by 1.2% compared to the previous year, that of the Eurozone by 1% and that of Germany by just 0.20%. In 2024 the respective rates were 1.4%, 1.2% and (-0.5%), i.e. the German economy had shrunk over 2023. In 2023 we are at 0.4%, 0.4% and (-0.9%), which is again shrinking. In 2022 the GDP of the European Union had increased by 3.6%, the Eurozone by 3.7% and Germany by 1.8%.
Germany's lag was clear and in 2021 it was a year of impressive growth everywhere as global economies recovered after Covid – 19, since the GDP of the European Union and the Eurozone grew by 6.4% and that of Germany was only 3.9%. A more careful study of the above evidence shows that the German economy started to run out of fuel gradually from the mid-2010s and clearly from 2018 onwards, as since then only one year later Germany's growth was higher than the total European.
The 2018 report was not accidental, as the downward course of industrial production in Germany has since begun, which we had seen before (Germany: Economic difficulties bring conflict with China | Liberal. gr) referring to an article by Pierre Briancon of Reuters Breakingviews. French columnist Reuters Breakingviews had dealt with the German economy and last April, with a rather pessimistic and critical article that was titled «Germany sleeps towards a permanent stagnation».
Briancon then pointed out that after 6 years of economic stagnation the forecasts for the development of 2026 and 2027 were still talking about a very small recovery. These forecasts even became more pessimistic after the outbreak of the Middle East war and the new increase in energy costs.
But what are Germany's main problems? One very large is China, which from where it was a privileged export destination for German industries as well as a productive base for them, has become its main export competitor around the world. In the automotive sector, German companies have suffered a drop in sales and profits in China at the time when Chinese companies in the sector make a strong landing in Europe. In general, however, China, with its industrial policy which forces all industrial forces in the world and Germany, as one of the top, is already suffering and is threatened even more.
Another major problem is energy costs, which have been very high since Germany voluntarily abandoned nuclear and coal without preparing reliable alternatives for emergencies such as that which has started since 2022. And it is quite burdensome, as for the rest of the European Union, by the very strict rules and restrictions within the framework of «green» European policy. The issue is very serious and even a few days ago, on 27 July, we read in a Bloomberg article that many German companies restrict investment within the country and turn to other countries.
In presenting an annual report on the situation of companies, the chairman of the business organisation DHIK argued that high energy costs are not only burdening current business activities but preventing further investment. Another problem for Germany and indirectly and for the rest of Europe is the low speed of changes and reforms announced by the Murch government, as it is not easy to reach an agreement between government partners.
It is true that in recent weeks some progress has been made, with the state budget plan showing that it will be fiscally expansive and the proposed changes to the pension system judged very positive by the country's business leadership. This sounds positive but no one can be sure that they will be promoted at the necessary speed so that they can quickly help to revive the German industry. And, we add, to benefit the rest of the European economy which has lost momentum to a significant extent and because of German stagnation.
As long as they are delayed, apart from Germany, the whole of Europe and the competitiveness of the European economy will be affected worldwide. In addition, however, Germany will perhaps have to look a little differently at its partners, at least in certain areas. The recent intervention by German Chancellor Murch, who called for the EU budget to be cut by around 2%, i.e. a few hundred billion euros, setting this as a condition for the rapid adoption of the budget and the early start of the EU's new investment programmes in January 2028, is not certain to help the European economy.
The chancellor argues that he wants the new seven-year budget to be adopted quickly so that he does not fall victim to the many elections in 2027 but his demand for large cuts in spending may get things into trouble. Bloomberg's information says the Irish presidency of the EU. He'll try to reach a compromise, but that's not that easy.
So is Germany again, after about 20 years, the great patient of Europe? In terms of economic growth there is no doubt, as we saw earlier. The question is whether it also harms the European economy. And to this the answer is rather positive as stagnation in such a large part of European GDP certainly works as a weight for the rest of the countries. The longer the German economic lethargy lasts, the greater the risk of other countries getting the same disease. If Germany succeeds quickly in bringing its reforms forward, this will increase the chances that this risk will be removed, of course, as long as Europe's strongest country does not put «tripling» to its partners.
