Kaput! Why is the economy collapsing… and how can we rebuild it?

This session is part of Battle of Ideas Berlin 2026.

For decades, Germany was regarded as Europe’s economic powerhouse. Its success appeared to rest on a reliable formula: competitive industry, affordable energy, skilled workers and a reputation for technical excellence. But that model seems to be crumbling as investment falls, infrastructure fails and technological leadership evaporates.  And as industrial production declines, export markets collapse and real wages stagnate, it seems clear: the German economy is in real crisis.

There is no shortage of different explanations. Business leaders point to high energy prices, taxes and labour costs and excessive bureaucracy and regulation. Critics of the government blame the escalating costs of a green transition and insufficient investment in education, infrastructure, innovation and digitalization, as well as the impacts of an overreaching welfare state and uncontrolled migration. Some blame wider factors: Covid-19, Trump, Putin – or even cynics or pessimists who talk down Germany’s prospects.

How can the vast problems of Germany’s economy be addressed?  With the debt-financed economic stimulus package struggling to keep growth above zero, the coalition government’s solutions appear lackluster or insufficient. Some argue for lower taxes, reduced public spending and removal environmental and labour regulations. Others say the crisis demonstrated the need for greater public investment, industrial subsidies and a more active state.

Is Germany really facing economic collapse, or has the language of crisis become a convenient weapon for companies seeking concessions and politicians promoting their preferred reforms? Can the country preserve its manufacturing base while pursuing ambitious climate targets? And if the German economic model no longer works, then who can we rebuild it and how?