Germany's Economic Turnaround Faces Political Challenges Amid Calls for Reform

Germany's economy has shown promising signs of recovery with a significant surge in industrial orders in December 2025. According to Bild, German industry experienced a 7.8% rise in orders compared to the previous month, marking the fourth consecutive month of growth. The metallurgical industry led this upswing with a sharp 30% increase in orders, while machinery orders rose by 11.5%. Economists are cautiously optimistic, describing this momentum as a potential economic "turnaround."

However, sustaining this growth depends heavily on urgent political reforms. Professor Veronika Grimm highlights the critical need for reforms aimed at limiting state expenditures and fostering sustainable growth. She warns that by 2029, state revenues will only cover defense, interest, and social spending, necessitating borrowing to fund other government expenditures.

Despite the positive economic indicators, Chancellor Friedrich Merz's government has been criticized for delaying necessary reforms. The Chancellor's Chief of Staff, Thorsten Frei, has dampened expectations for swift tax reforms, causing frustration among the business community. Rainer Dulger, President of the Confederation of German Employers' Associations, pointedly criticized the political inaction, stating it harms the country. Dulger emphasized the importance of cutting taxes and social contributions to stimulate employment and economic growth, advocating for a leaner state and reduced bureaucracy.

At the same time, some voices in the political commentary space suggest that relentlessly criticizing government performance in Germany, a nation where critique might be considered a "national sport," doesn't contribute to solutions. An article from WirtschaftsWoche calls for acknowledging and recognizing small but effective policy steps as a more constructive approach than constant polemics.

In sum, while Germany's industrial growth raises hopes for an economic rebound, the future stability and expansion hinge substantially on whether political leaders can break the reform deadlock. The government's next moves on fiscal and tax policy reforms will likely shape Germany's economic trajectory in the coming years.