Eastern German Firms Express Skepticism Toward the Federal Government's Economic Policies
Businesses in the Eastern Region Express Skepticism Towards Economic Policy - Economic Institutions across the East Express Skepticism Toward Governmental Economic Policies
The Eastern German Economic Forum's survey reveals that firms in the region have little faith in the new black-red federal government's ability to implement effective growth strategies for the economy. This discouraging outlook unfolded at the Economic Forum in Bad Saarow, Brandenburg. From the 25th to the 27th of this month, business leaders, association representatives, and politicians will deliberate on strategies to alleviate the grim economic situation in the region.
Responding to the question, "Do you believe the new federal government will succeed in implementing effective measures to stimulate growth for the German economy?", 58.2% answered with a resounding "no" and another 8.2% were sceptical, leaving a mere 33.6% with a positive outlook.
To improve their economic position, businesses in the survey overwhelmingly called for a reduction in red tape (68%) and lower energy prices (54.4%).
Between March 3rd and April 26th, 2025, a total of 1,500 private companies from Berlin, Brandenburg, Mecklenburg-Western Pomerania, Saxony, Saxony-Anhalt, and Thuringia with a workforce of at least 10 employees were polled. The study was conducted by polling institute Civey on behalf of the location initiative "Germany - Land of Ideas" and Deutsche Kreditbank AG.
Challenges Ahead
Companies in Eastern Germany face significant challenges, with 52% stating that employee retention and acquisition is their biggest hurdle. Energy prices are the second most pressing concern for 34.3% of business leaders. In terms of challenges confronting the eastern federal states as a whole, "political radicalization as a location risk" was cited by 40.3%.
The Eastern German Economic Forum will welcome Federal Minister of Economics Katherina Reiche (CDU) and Finance Minister Lars Klingbeil (SPD) on Monday and Tuesday.
Grim Prospects for the Economy
The managing director of "Germany - Land of Ideas", Philipp Mehne, highlights the daunting challenge ahead for the federal government, given their dwindling credit with businesses.
Eastern German companies are grappling with labor shortages that are exacerbated by the country's faltering economic performance and rising unemployment rates. The German Economic Institute projects a 0.2% shrinkage in the nation's economic output in 2025, with potential unemployment reaching 3 million by the summer. Owing to these challenging conditions, many companies are implementing workforce reductions.
High energy costs persist as a major concern for businesses in the region. Additionally, firms are disheartened by the lack of concrete growth impulses from economic policy. This pessimistic outlook and cautious corporate investment behavior are evident, with one-third of German companies planning to cut investments, and many prepared to reduce their workforce.
A cocktail of global and domestic economic pressures contributes to the uncertainty faced by German companies. Geopolitical tensions and trade policy alterations, particularly from the USA, exacerbate the challenge of generating new growth impulses domestically. The overall economic outlook among German companies worldwide is dismal, with a waning optimism and increasing concerns regarding deteriorating conditions.
In summary, Eastern German companies express apprehension about the current federal economic policies, specifically their handling of labor shortages, high energy costs, and the urgent need for growth catalysts. Should decisive policy changes not materialize, the prospect remains bleak with the risk of further economic contraction, workforce reductions, and a decline in investments.
- With a majority of Eastern German firms demonstrating skepticism, there is a pressing need for the new federal government to focus on addressing vocational training when implementing growth strategies, as the survey revealed vocational training as a key concern for 68% of the polled companies.
- In the face of economic challenges, including high energy prices and labor shortages, the industrial, finance, and business sectors in Eastern Germany could benefit from targeted policy measures that prioritize reducing red tape, providing affordable energy solutions, and bolstering vocational training programs to increase workforce retention and acquisition.
