German Economy Unravelling: Hospitality Crisis, Jobs Vanishing & Industrial Decline

While the federal government is desperately waiting for the start of the multi-billion euro debt package, the real economy is burrowing ever deeper into the ground. The numbers from the hospitality sector speak a clear language: things continue to go downhill.

On Monday, Chancellor Friedrich Merz visited the six-day congress of the trade union IG BCE (Industrial Union for Mining, Chemicals, Energy). There he emphasised the high importance of social partnership between workers, employers and politics and assured the union that he was well aware of the increasingly difficult situation of many people in the country.

In these days Merz would have done better to visit the German hospitality industry. There, without the glamorous distraction of a functionary congress, he could have seen first-hand the reality of the German economy: The interest in uplifting speeches by the Chancellor among restaurateurs, hoteliers and caterers is likely vanishingly small — business is simply too bad.

Cold shower in the holiday season

The Statistisches Bundesamt (Destatis) delivered catastrophic figures for August for the entire German hospitality industry, i.e., both gastronomy and hotels: Even in the most important vacation month, restaurants, hotels, caterers and snack bars lost a real turnover volume of 3.5 per cent compared with the previous year. Nominally there was still a minus of 0.6 per cent in the overall balance. Also compared with the previous month, July, the hospitality sector lost real turnover of 1.4 per cent.

Such a poor development, of all times in the high-volume holiday months, is a fatal proof that nothing seems to be running smoothly anymore in the German economy — exactly now you would have had to cash in. Here, the until now weak year with a minus of about 4 per cent at least should have offered a small glimmer of hope. Pfft. The summer months turned into a disaster. 

Consumers are suffering under the political framework conditions, the high energy prices, inflation and the labour market, which has long since entered rough seas.

Those who take a look into the engine room of the German economy will quickly find the causes for this crisis. It is the expression of an economic disaster that remains insufficiently described in media and politics. The industrial core of the German economy could not permanently withstand the shockwaves of the Brussels eco-regulators and the gnawing attacks of interest-driven NGOs such as the Deutsche Umwelthilfe.

General decline 

And so it came to pass, as it had to. Starting from its best year 2018, German industry across sectors lost a production volume of almost 25 per cent — an indescribable exodus of firms abroad, countless insolvencies: an economic knockout, delivered by a self-inflicted uppercut. 

Large parts of the economy hang on this industrial foundation as if on an umbilical cord — once it is severed, the service providers, the suppliers, the hospitality industry, tourism plunge too. Roughly 1.3 million jobs in the private sector have disappeared to date.

The German economy is in a veritable clearance sale — in a spiral of deindustrialisation. From July 2024 to today, more than 270,000 jobs have been lost in the manufacturing industry, the metal, electrical and steel industries. At the same time, the public administration expanded by almost 50,000 new jobs this year.

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