Firm Founding in Germany Hits Record Lows, Raising Economic Concerns

A ZEW study reveals a sharp decline in business startups since the 1990s, with bureaucracy, energy costs, and labor shortages cited as key barriers.

The number of new businesses in Germany has dropped significantly since the mid-1990s, from 240,000 in 1995 to 161,000 in 2023, according to a ZEW study.
While 2023 saw a modest 1.3% increase in startups, this growth was largely driven by the hospitality sector, while industrial sectors continued to decline.
Research-intensive industries such as machinery, chemicals, and electronics have seen startup rates more than halved since 2002, raising concerns about potential innovation gaps.
Bureaucratic hurdles, high energy costs, and shortages of skilled labor are identified as major challenges for new businesses, particularly in energy-intensive sectors like steel and pharmaceuticals.
Experts warn that declining competition and fewer radical innovations could harm Germany's long-term economic prospects, urging policymakers to address barriers to entrepreneurship.