Economic Struggles Persist Across Northern Germany and Bavaria

Businesses report low confidence, reduced investment, and mounting challenges as regional economies falter.

The economic climate in Schleswig-Holstein remains strained, with the regional business confidence index significantly below the long-term average, rising only slightly from 86.4 to 87.2 in late 2024.
Only 9% of businesses in Schleswig-Holstein expect economic improvement in the next year, while 34% foresee further deterioration, particularly in construction, industry, and retail sectors.
Investment in Germany is increasingly focused on maintaining existing operations, with two-thirds of companies prioritizing replacement over growth, while foreign investment interest rises sharply.
Key challenges cited by businesses include labor shortages (55%), high labor costs (54%), weak domestic demand (52%), and rising energy and raw material costs (48%).
Experts warn that without significant policy changes, such as reducing bureaucracy and addressing competitiveness issues, the economic downturn could lead to long-term damage to regional industries.