Critics Question German Government’s Economic Strategy Amid Industrial Crisis and Consultant Spending Surge
Germany faces criticism over its economic crisis management and escalating government consultant expenditures under Chancellor Merz.
- • Industrial sector in Germany is in distress with potential job losses, urging urgent government action.
- • Chancellor Merz's administration has significantly increased spending on external consultants.
- • Consulting costs at the Federal Employment Agency rose from €13 million in 2023 to €31 million by late 2025.
- • Federal Court of Auditors criticizes the lack of strategy to reduce dependency on consultants.
- • German economy forecast to shrink in 2024 while consulting firms see growth nearing 10%.
Key details
Germany is grappling with a deepening economic crisis in 2025, with serious concerns about its industrial sector and government policies under Chancellor Friedrich Merz. According to Jürgen Kerner, the Second Chairman of IG Metall responsible for industrial policy, the government appears to be struggling to grasp the severity of the situation. Kerner warns that the industry is in distress and many jobs hang in the balance, urging for immediate and effective action to stabilize the economy and prevent further decline (122046).
At the same time, Merz’s government is facing mounting criticism over its soaring expenditures on external consultants. Despite pre-election promises of streamlining government operations, spending on consulting services has ballooned, especially within the Federal Employment Agency where costs rose from €13 million in 2023 to €31 million by September 2025. Overall, federal spending on external consultants has exceeded €1.6 billion over the past decade, and the current administration has surpassed previous governments in hiring consultants (122052).
The Federal Court of Auditors has expressed concern over the lack of a coherent plan to reduce this reliance on consultants, warning that past dependence on external advisors has resulted in costly mismanagement, including scandals related to heating law implementations and pandemic contracts. Paradoxically, the number of federal employees has increased to nearly 300,000 even as consulting fees surge, raising questions about government efficiency (122052).
While the German economy is forecasted to shrink in 2024, consulting firms—particularly the Big Four—have recorded nearly 10% growth, reflecting a disconnect between the government’s economic challenges and its outsourcing practices. This dual crisis highlights broader questions about the German government’s understanding of its economic difficulties and its strategy to address them (122046, 122052).