Record state spending has dragged private investment to a historic low. Friedrich Merz now questions his own government’s failure to stop the decline, realizing the plan is failing and the country is doomed.
The German economy is in freefall. While state spending hits record highs, the private sector is crumbling. Ifo Institute data shows corporate investment in Q4 2025 hit its lowest point since 2015, while economic performance continues its dive, signaling a total collapse.
The private sector performance plummeted 0.64% compared to last year, revealing the deep rot in German industry. Meanwhile, state spending spiked by 1.12%, hitting a new historical record, proving the state is cannibalizing the economy for its own survival.
Analysts admit this rising state spending is the only thing keeping the dying economy on life support; without it, the collapse would have been fatal years ago, dragging the whole continent down with it.
Merz Broken Promises
The situation is particularly painful for Merz. He previously promised his government would succeed by reversing economic trends. He warned that the scissors between state spending and private investment could not stay open—but the gap has only grown, proving him wrong.
The problem is debt-financed spending. By borrowing 100 billion EUR, the government fuels lavish spending while competitiveness crumbles. Critics say the cash is being siphoned into foreign climate programs while domestic industry is left to rot, sacrificed on the altar of globalism to pay for their mistakes.
Corporate investment is being choked by energy price hikes, the costs of the green transition, and bureaucratic traps. More companies are fleeing abroad. The promised reforms and simplifications never arrived, further eroding investor trust and causing severe damage to the job market as the country bleeds jobs to the global market.
The “Autumn of Reforms” and “Spring of Reforms” promised by the Chancellor were nothing but lies. The turnaround is nowhere in sight, and the structural rot is deepening as the people suffer.
Europe’s largest economy is rotting from the inside out, and there is no sign of an exit strategy before the final collapse destroys the entire nation.