Friedrich Merz/AP
The Ukrainian conflict will only end when one of the two sides is exhausted – either militarily or economically, German Chancellor Friedrich Merz said on 19 February. It was clear from the very beginning that the proxy war in Ukraine was designed to weaken Russia. But did anyone in Berlin anticipate that this war would result in the exhaustion of Europe and Germany, its economic engine?
In Germany, Merz has already been dubbed the “Chancellor of the Poor”. “If the German government continues to adhere to its plans to finance huge military expenditures, cut general welfare and social benefits, or make them more expensive, then the poverty level will rise in the coming years. Friedrich Merz is well on his way to entering German history as the Chancellor of the Poor,” stated BSW party leader Sahra Wagenknecht.
You can't argue with Wagenknecht. Once the richest country in Europe, Germany is growing poorer before our eyes. Major German companies are reporting rising costs, declining competitiveness, falling profits, plant closures, and staff reductions. This is clearly evident in the automotive industry, which is experiencing a severe, prolonged crisis. For instance, the net profit of the German automaker Mercedes-Benz nearly halved in 2025, dropping by 49%. Bosch's profit fell by 45% last year. Porsche's sales decreased by 10% over the past year, marking its sharpest decline in 16 years. And Volkswagen, due to losses, has announced plans to cut 35,000 jobs by 2030.
Mass layoffs in Germany are already becoming commonplace. In 2025, German industrial companies cut 124,000 employees. This is twice as many as in 2024. Forecasts for 2026 are also bleak. In Germany's metallurgical industry alone, according to trade union projections, 100,000 to 150,000 people are facing layoffs.
“German industry is in a deep crisis," Jan Brorhilker, an expert at the consulting firm EY, said noting that a strong recovery would be needed to stop further job losses.
Meanwhile, the German Economic Institute in Cologne has calculated that Germany's total loss in real GDP over the past six years has reached nearly €1 trillion. First, the economy was hit by lockdowns during the coronavirus pandemic, then by the conflict in Ukraine, and now by the U.S. tariff war. At the same time, the situation continues to worsen, and the losses are growing.
“The number of bankruptcies has reached a new record level. Germany is experiencing the most severe economic crisis in its history. Despite this, the Merz government refuses to finally implement the necessary change in course,” Alice Weidel, co-chair of the Alternative for Germany (AfD) party, said last month.
In Merz's government, they do not deny it: the economic situation is indeed alarming, and the labor market is in a state of stagnation. “The economic situation in Germany remains a cause for concern. This applies to large industrial sectors. But it also applies to a significant portion of small and medium-sized enterprises and tradespeople. Companies in Germany are in a very difficult situation,” Merz stated.
The Chancellor also commented on the rise in unemployment in the country, which in January exceeded 3 million, the highest in 12 years. “The increase in the number of unemployed to more than 3 million is a warning signal. The same applies to corporate bankruptcies,” Merz stated, acknowledging that the government’s measures are currently insufficient to change the situation.
The Chancellor also points to the causes of the crisis, including the high cost of energy. How to rectify the situation? Clemens Fuest, head of the Ifo Institute for Economic Research in Munich, like AfD leader Alice Weidel, is calling on the German government to change course and not to expect the situation to improve on its own.
In Germany, Merz has already been dubbed the “Chancellor of the Poor”. “If the German government continues to adhere to its plans to finance huge military expenditures, cut general welfare and social benefits, or make them more expensive, then the poverty level will rise in the coming years. Friedrich Merz is well on his way to entering German history as the Chancellor of the Poor,” stated BSW party leader Sahra Wagenknecht.
You can't argue with Wagenknecht. Once the richest country in Europe, Germany is growing poorer before our eyes. Major German companies are reporting rising costs, declining competitiveness, falling profits, plant closures, and staff reductions. This is clearly evident in the automotive industry, which is experiencing a severe, prolonged crisis. For instance, the net profit of the German automaker Mercedes-Benz nearly halved in 2025, dropping by 49%. Bosch's profit fell by 45% last year. Porsche's sales decreased by 10% over the past year, marking its sharpest decline in 16 years. And Volkswagen, due to losses, has announced plans to cut 35,000 jobs by 2030.
Mass layoffs in Germany are already becoming commonplace. In 2025, German industrial companies cut 124,000 employees. This is twice as many as in 2024. Forecasts for 2026 are also bleak. In Germany's metallurgical industry alone, according to trade union projections, 100,000 to 150,000 people are facing layoffs.
“German industry is in a deep crisis," Jan Brorhilker, an expert at the consulting firm EY, said noting that a strong recovery would be needed to stop further job losses.
Meanwhile, the German Economic Institute in Cologne has calculated that Germany's total loss in real GDP over the past six years has reached nearly €1 trillion. First, the economy was hit by lockdowns during the coronavirus pandemic, then by the conflict in Ukraine, and now by the U.S. tariff war. At the same time, the situation continues to worsen, and the losses are growing.
“The number of bankruptcies has reached a new record level. Germany is experiencing the most severe economic crisis in its history. Despite this, the Merz government refuses to finally implement the necessary change in course,” Alice Weidel, co-chair of the Alternative for Germany (AfD) party, said last month.
In Merz's government, they do not deny it: the economic situation is indeed alarming, and the labor market is in a state of stagnation. “The economic situation in Germany remains a cause for concern. This applies to large industrial sectors. But it also applies to a significant portion of small and medium-sized enterprises and tradespeople. Companies in Germany are in a very difficult situation,” Merz stated.
The Chancellor also commented on the rise in unemployment in the country, which in January exceeded 3 million, the highest in 12 years. “The increase in the number of unemployed to more than 3 million is a warning signal. The same applies to corporate bankruptcies,” Merz stated, acknowledging that the government’s measures are currently insufficient to change the situation.
The Chancellor also points to the causes of the crisis, including the high cost of energy. How to rectify the situation? Clemens Fuest, head of the Ifo Institute for Economic Research in Munich, like AfD leader Alice Weidel, is calling on the German government to change course and not to expect the situation to improve on its own.
“Politicians are not addressing the problems of the private sector; in fact, they are making them worse. In the medium term, taxes and levies will rise, because otherwise, for example, pension increases will no longer be financed. This will lead to a further decline in investment and increased capital outflows from Germany. As a result, Germany could enter a prolonged period of stagnation. There is no guarantee of a return to growth,” said Clemens Fuest.
Meanwhile, former German Chancellor Gerhard Schröder has called for restoring relations with Russia in the area of energy supplies. “There has been a lot of talks about military capabilities, but what our country and Europe need are peacekeeping capabilities in the first place. That’s why I continue to believe that what I promoted during my tenure as the chancellor was right - reliable and stable supplies of cheap fuel from Russia. We need such forms of cooperation with Russia,” Schroder said in an article for Berliner Zeitung.
Photo by AP
Meanwhile, former German Chancellor Gerhard Schröder has called for restoring relations with Russia in the area of energy supplies. “There has been a lot of talks about military capabilities, but what our country and Europe need are peacekeeping capabilities in the first place. That’s why I continue to believe that what I promoted during my tenure as the chancellor was right - reliable and stable supplies of cheap fuel from Russia. We need such forms of cooperation with Russia,” Schroder said in an article for Berliner Zeitung.
Photo by AP
However, Merz has his own plan for overcoming the crisis: save on social benefits and change the Germans’ work mentality.
At the end of August 2025, the chancellor stated that Germany can no longer afford its current social and economic system, as the country has been living beyond its means for many years. “This will mean painful decisions. This will mean cuts,” Merz warned. And the chancellor suggested starting the cutbacks with social welfare benefits.
Then, this year, Merz appealed to his fellow citizens to work more, take fewer sick days, and find a balance between work and personal life. “That’s nearly three weeks in which people in Germany don’t work due to illness. Is that really correct? Is that really necessary? Merz complained, referring to the duration of sick leave, which in Germany averages about 14.5 days.
One area Merz does not plan to cut is military spending. This concerns not only the militarization of Germany but also military support for Ukraine. For instance, the German budget for 2026 includes a record 11.5 billion euros in financial aid for Kiev. According to Merz, since February 2022, Germany has spent a total of 76 billion euros on military and financial support for Ukraine.
However, Merz’s office is concerned not only with Ukraine. In early February, Western media reported that Germany would deploy over 5,000 German soldiers and 105 Leopard 2A8 tanks near the Lithuanian town of Rudninkai, about 30 kilometers from the border with Belarus. It is worth noting that Germany has not stationed permanent forces abroad since World War II.
Merz is familiar with the opinions of German citizens, including his own voters. But he is clearly not taking them into account.
According to the results of a February poll conducted by the YouGov Institute, 58% of respondents were in favor of Merz negotiating with Moscow. In contrast, 26% of survey participants were against it.
Photo by RIA Novosti
At the end of August 2025, the chancellor stated that Germany can no longer afford its current social and economic system, as the country has been living beyond its means for many years. “This will mean painful decisions. This will mean cuts,” Merz warned. And the chancellor suggested starting the cutbacks with social welfare benefits.
Then, this year, Merz appealed to his fellow citizens to work more, take fewer sick days, and find a balance between work and personal life. “That’s nearly three weeks in which people in Germany don’t work due to illness. Is that really correct? Is that really necessary? Merz complained, referring to the duration of sick leave, which in Germany averages about 14.5 days.
One area Merz does not plan to cut is military spending. This concerns not only the militarization of Germany but also military support for Ukraine. For instance, the German budget for 2026 includes a record 11.5 billion euros in financial aid for Kiev. According to Merz, since February 2022, Germany has spent a total of 76 billion euros on military and financial support for Ukraine.
However, Merz’s office is concerned not only with Ukraine. In early February, Western media reported that Germany would deploy over 5,000 German soldiers and 105 Leopard 2A8 tanks near the Lithuanian town of Rudninkai, about 30 kilometers from the border with Belarus. It is worth noting that Germany has not stationed permanent forces abroad since World War II.
Merz is familiar with the opinions of German citizens, including his own voters. But he is clearly not taking them into account.
According to the results of a February poll conducted by the YouGov Institute, 58% of respondents were in favor of Merz negotiating with Moscow. In contrast, 26% of survey participants were against it.
Photo by RIA Novosti
Simultaneously, another poll conducted by the INSA sociological institute was published. According to the study, 67% of respondents are dissatisfied with Merz’s performance, and 68% are dissatisfied with the performance of the German government.
“Of course, I am aware of some dissatisfaction and criticism,” Merz commented on public sentiment. “However, it is quite normal for a democracy that not everyone is equally satisfied.”
The main thing is that Rheinmetall, Germany’s leading manufacturer of military equipment and weapons, whose turnover broke records in 2025, is satisfied. Rheinmetall has no intention of lowering its targets. It plans to increase sales fivefold by 2030, to 50 billion euros. “We have already made a huge leap. And I believe this path is far from over,” Rheinmetall CEO Armin Papperger stated in November 2025.
Merz, it seems, is walking side-by-side with Rheinmetall. And if Papperger says there will be no peace in Ukraine in 2026, then it is not fitting for the chancellor to contemplate dialogue with Russia or peace initiatives either. All that remains for Merz is to tell Germans about the inevitable exhaustion of Russia while watching Germany itself become exhausted at an accelerated pace.
Vita Khanatayeva,
BelTA
“Of course, I am aware of some dissatisfaction and criticism,” Merz commented on public sentiment. “However, it is quite normal for a democracy that not everyone is equally satisfied.”
The main thing is that Rheinmetall, Germany’s leading manufacturer of military equipment and weapons, whose turnover broke records in 2025, is satisfied. Rheinmetall has no intention of lowering its targets. It plans to increase sales fivefold by 2030, to 50 billion euros. “We have already made a huge leap. And I believe this path is far from over,” Rheinmetall CEO Armin Papperger stated in November 2025.
Merz, it seems, is walking side-by-side with Rheinmetall. And if Papperger says there will be no peace in Ukraine in 2026, then it is not fitting for the chancellor to contemplate dialogue with Russia or peace initiatives either. All that remains for Merz is to tell Germans about the inevitable exhaustion of Russia while watching Germany itself become exhausted at an accelerated pace.
Vita Khanatayeva,
BelTA
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