The German population is becoming increasingly concerned about the country’s economy amid political instability and uncertainties about the future of Europe’s largest economic power. According to a survey released on Monday (February 10) by the German reinsurance company R&V, 70% of Germans said they are worried about the rising cost of living, a significant increase from the 57% recorded in the previous survey.

The study, conducted between January 23 and 25, surveyed 1,000 respondents from various age groups and regions across the country, revealing a growing sense of pessimism. The population’s fear is directly linked to rising prices for essential goods, high energy costs, stagnant wages, and the prospect of a prolonged recession. Additionally, the political crisis that led to the dissolution of the governing coalition at the end of last year has contributed to a widespread sense of uncertainty.

Although inflation rates have slightly decreased in recent months, Germans perceive prices as remaining high and wages as not keeping up with these increases. According to experts, this discrepancy occurs because, while inflation has decreased, the absolute prices of basic products and services have remained elevated.

“Inflation may have fallen, but absolute prices have remained high,” explained Isabelle Borucki, the study’s consultant and a researcher at Philipps University of Marburg.

Housing, food, and transportation costs are the main factors putting pressure on German family budgets. In cities like Berlin, Munich, and Hamburg, rents have risen significantly in recent years, making housing one of the biggest challenges for the population.

Furthermore, the energy crisis exacerbated by the war in Ukraine has driven up electricity and natural gas prices, making life harder for millions of Germans. Even with government measures to ease costs, many families are still feeling the effects of rising energy prices.

Another alarming finding from the survey is that 68% of respondents fear an economic downturn in the country, up from 48% in the previous survey. This significant increase reflects Germany’s difficulty in resuming economic growth amid industrial slowdown and a loss of competitiveness in the global market.
Germany’s economy shrank for the second consecutive year in 2024, impacted by several factors, including weakening industry, declining exports, and high credit costs due to the European Central Bank’s interest rate hikes. This context has led companies to adopt drastic measures, such as reducing production and cutting jobs.

One of the sectors hardest hit by the crisis is the automotive industry, which has been a pillar of the German economy for decades. Major car manufacturers, such as Volkswagen, Mercedes-Benz, and BMW, are facing significant challenges due to the transition to electric vehicles, fierce competition from Chinese manufacturers, and new environmental regulations from the European Union.

Volkswagen, for example, recently announced thousands of job cuts as part of a plan to reduce costs and stay competitive in the global market. These layoffs reflect a broader trend in the German economy, where companies in various sectors have been cutting their workforce in response to the challenging economic environment.

In addition to the automotive sector, other traditional industries such as chemicals and metallurgy have also been facing difficulties, directly affecting the labor market. Many workers fear for their job stability, contributing to the growing economic insecurity among the population.

The economic turbulence comes at a time of significant political instability in Germany. In November of last year, the tripartite coalition led by Chancellor Olaf Scholz collapsed due to internal disagreements on how to handle the economic crisis.

The government, which consisted of the Social Democratic Party (SPD), the Greens, and the Free Democratic Party (FDP), dissolved after months of disputes over fiscal policies and strategies to revive the economy. With the end of the coalition, Scholz now governs with a minority coalition made up only of the SPD and the Greens, making it difficult to pass new measures in parliament.

This political instability has deepened public distrust in the country’s leaders. The survey revealed that over 60% of Germans believe that politicians, both from the government and opposition, are overwhelmed and unable to manage the economic situation.

“The trust Germans have in politicians is alarmingly low,” said Grischa Brower-Rabinowitsch, the study’s director. “Many people no longer feel represented; political debates often seem disconnected from reality and motivated by party interests rather than real solutions to the country’s problems.”

Dissatisfaction with the political class could directly influence the outcome of the upcoming elections, as support grows for opposition parties and more radical political groups. The far-right Alternative for Germany (AfD) has gained strength, capitalizing on public dissatisfaction with the economic crisis and the current government’s management.

As Germany prepares for new elections, the primary concern of the population is finding concrete solutions to the country’s economic and social challenges. Experts suggest that to reverse the current situation, a coordinated set of measures will be needed, including:

• Economic stimulus to reactivate industry and commerce
• Investments in renewable energy to reduce dependence on fossil fuels and lower energy costs
• Labor market policies to curb unemployment and train the workforce for new technological challenges
• Tax reforms to ease the tax burden on the population and small businesses

The future of the German economy will depend on the government’s ability to restore investor and consumer confidence, as well as implement effective policies to face global competition. However, with a fragmented political landscape and an increasingly disillusioned population, the challenge will be immense.

In the meantime, the German population remains anxious, hoping that the coming months will bring clearer definitions about the country’s future. The result of the elections will be crucial for the economic recovery and political stability of Germany in the coming years.