Recruit Sales in Germany Update Bulletin January 2025

GERMAN ECONOMIC INDICATORS January 2025

At the start of 2025, business sentiment in the German economy is uncertain at best. Thirty-one of the forty-nine associations surveyed by the German Economic Institute (IW) rated the current situation in their sector as worse than a year ago.

There are many reasons for this: the high costs of energy, labour, materials, and taxes, as well as excessive bureaucracy, which burden companies and have led to their loss of international competitiveness.

The current forecasts of German economic research institutes and government organizations on the development of GDP in Germany currently vary between +/-0.0% and +1.1% for the calendar year 2025; the most optimistic estimate of +1.1% comes from the German government:

The uncertain global situation and weak demand in China are also hampering exports and the political limbo caused by the collapse of the traffic light coalition is delaying necessary investments. Short to mid-term little change is to be expected.

Twenty out of forty-nine industry representatives surveyed expect production to be lower in 2025, while only sixteen expect an increase.

Amongst the optimists are companies from the energy and water industries, the pharmaceutical industry, paper mills and logistics.

The manufacturing sector is suffering greatly, mainly from high energy and labour costs, with many companies not being competitive enough in international markets, for example, the automotive and steel industries.

Companies' business expectations also deteriorated significantly in December 2024 compared to the previous month (-2.6 points). At 84.4 points, the ifo index is now back at roughly the same level as in January 2024: 83.9 points. In February 2022, i.e. before Russia's invasion of Ukraine, the index was still at 98.1 points.

German Exports January 2025

Germany's BGA trade association said on Tuesday that about 80% of German businesses that trade overseas expect a further decline in sales this year. The association forecasts a 2.7% decline in turnover compared with 2024.

"The outlook for 2025 is bleak," said a BGA spokesperson. "Small and medium enterprises have lost their trust in politics."

Another risk for the German economy is the tariffs promised by U.S. President Donald Trump, measures he says would boost U.S. manufacturing. Germany and the EU will have to wait to see what steps Trump takes.

German Politics

Germany will hold elections on Feb. 23, and how to revive economic growth in Europe's biggest economy, especially in exports is one of the main topics of the election campaign.

German foreign trade has always been "a reliable anchor" for the economy but now the slowdown in the sector will take its toll in the labour market.

According to the survey, 30% of the companies are planning job cuts, Volkswagen for example is even considering closing five production facilities in Germany. Other OEMs are following suit and looking to massively cut costs. Orders are dropping, investment is declining, and insolvencies are increasing.

According to a BGA survey, 36% of the companies in the sector invested less in 2024 than in the previous year.

"Without a turnaround in economic policy, without a clear policy change from Feb. 23 onwards we will no longer be able to shoulder these challenges for long," quoted a BGA spokesperson. Industry is looking for investment in infrastructure, business-friendly conditions, cuts in red tape, and lower energy and labour costs.

Employment

The minimum wage is regularly adjusted to take account of the changing cost of living. On January 1, the statutory minimum wage was raised to 12.82 euros. With a few exceptions, the statutory minimum wage applies to all employees aged eighteen and over – regardless of their working hours or the scope of their employment.

The overall economic weakness is leaving clear scars on the labour market and public finances.

The number of unemployed people has increased by 370,000 since summer 2022 (excluding Ukrainian refugees). The rate of unemployment in Germany is likely to rise from 6 per cent in the current year to 6.3 per cent in the next two years.

Summary

If you are looking to recruit experienced sales staff to enable you to develop new or existing markets within Germany, the UK, Europe or further afield, please call us for a no-obligation discussion.

Some facts about Germany

Germany has a population of approximately eighty-four million people.

Germany is the seventh-largest country in Europe. Covering an area of 137,847 square miles, of which 34,836 square miles is covered by land and 3,011 square miles contains water.
The economy of Germany is a highly developed social market economy. The country accounts for about 28% of the euro area economy according to the IMF.
With a gross domestic product of 4,121 billion euros in 2023, Germany is the third largest economy in the world after the United States and China, making it the largest economy in Europe.
Exports of motor vehicles and parts and chemical products in particular make Germany the third largest export nation in the world. At 70%, the service sector accounts for the largest share of the country's gross domestic product.
Germany is one of the world’s premier locations for organising international trade fairs. Two-thirds of the major global industrial events take place in Germany. Ten million visitors attend around 150 international trade fairs and exhibitions each year.

Please note the information contained herein is an aggregate of news stories, by commentators widely available - readers should seek independent verification, and this in no way represents the views or opinions of Standley Associates.

We will continue to check the news reports and will provide monthly summaries of the trends