The German industry association for the metals and electronics sector, Gesamtmetall, or the Federation of German Employers’ Associations in the Metal and Electrical Engineering Industries (M+E), sees bleak perspectives for the country’s economy.
In its latest economic report, published on February 27, the association warns that Germany may already be “permanently damaged” as a location for the manufacturing sector.
M+E economist Lars Kroemer told Brussels Signal yesterday: “We see a significant divergence between German metals and electronics production and global industrial output.
“Private companies’ investments in property, plant and equipment have fallen further by the end of 2025,” he said.
“This is mainly due to the persistently poor assessment of the competitive conditions for German manufacturing companies, particularly in comparison with non-European locations; these have never been in negative territory for so long,” Kroemer concluded.
Germany’s economy is suffering under a continued competitiveness and investment crisis. As of early 2026, more M+E member companies have said their industry’s competitive position compared to non-European Union competitors had worsened – and they are cutting back on their investments.
In official GDP statistics, though, the effect of the decaying industrial bases is – at least partially – compensated by ballooning state expenditure.
As an effect, the manufacturing sector’s share of gross economic value added fell to a 35-year-low of 19.4 per cent in late 2025 according to the industry association’s statistics.
Meanwhile, the public sector’s share of gross economic value added climbed to 20.5 per cent, surpassing manufacturing for the first time since the statistics were first calculated in 1991.
The metals and electronics sector is a main pillar of German industry, responsible for 68 per cent of total wages paid in the industrial sector and 81 per cent of research and development expenses.
The sector – that includes companies such as automotive manufacturer Mercedes Benz and industrial group Siemens – still employs 3.8 million people. In 2019, though, total employment in the sector amounted to more than 4 million people.
M+E demands bold steps from the German Government: “Without bold structural reforms, deindustrialisation will continue,” it warns.
