More job cuts on the way as German economy struggles to recover

As EU car companies struggle with the phasing out of combustion engines and a transition to electric vehicles before 2035, experts are predicting that thousands more jobs may be cut across different sectors over the next couple of years.

DIW President, Marcel Fratzscher, says that the German economy is both export and industry dependent, and in the face of the energy transition, "companies have missed out on the transformation," and that many, such as VW, have "fallen behind".

"It's not just the automotive sector, it's machinery, it's the pharmaceutical, the chemical sector, this is quite a problem many have," he told Euronews.

The largest chemical producer in the world, who has its headquarters in Germany, BASF, is also looking at relocating some of its workforce to Asia and laying off workers in Germany amid exploding energy prices due to the full scale in Ukraine and burdensome bureaucracy in Germany. 

Has Germany lost its competitiveness?

Asia is on an economic upwards spiral, which is having a global impact.

"German companies have located already a lot of production to China, to India, elsewhere, and this will continue," Fratzscher said.

With China starting to reduce competition and subsidising their own companies, it "makes it harder for German companies to compete," especially with high energy and labour costs in Europe.

So what next for the German economy?

DIW said it sees a "stagnation of the German economy this year, a gradual recovery in the next few years." The German economy shrunk again in the second quarter of 2024, and is technically in a recession, with industrial production continuing to fall.

The car industry has particularly been affected with low demand for electric vehicles, due to slow investment in