REGIONAL REPORT
15 % baseline tariff applied to the rest of the machine. Depending upon the steel content, this creates a tariff burden that could approach 50 % in effective terms. The new regulations impact not only new machines, but spare parts as well. These tariffs will place significant pressure on the European machine tool sector, increasing costs and uncertainty for European exporters, unless the European Commission is able to negotiate with the new U. S. administration on this issue,” commented CECIMO, the European Association of Manufacturing Technologies, on 12 September 2025.
The Startup area at EMO Hannover 2025.
Image: EMO / VDW.
Navigating key challenges
Germany’ s economy has been resilient, but reforms are needed to unlock business dynamism and investment. Reducing administrative burdens for firms and regulatory barriers to competition while addressing skilled labour shortages will help to revive economic growth and maintain high living standards across the country, according to a new OECD report. Working with over 100 countries, the OECD is a global policy forum.
The‘ OECD Economic Survey of Germany’ in June 2025 projects GDP to grow by 0.4 % in 2025 and 1.2 % in 2026. Inflation is expected to average 2.4 % in 2025 and 2.1 % in 2026.
“ The recent reform of fiscal rules will enable increases in defence spending and address a large infrastructure investment backlog. To ensure medium-term fiscal sustainability, this reform should be combined with measures to raise spending efficiency, reallocate spending and broaden the tax base, while addressing rising spending pressures due to population ageing. Phasing out fiscal incentives for early retirement, while improving working conditions and incentives for older workers to work longer, would help to stabilise the pension system,” said the report.
“ Continuing to accelerate structural reforms is key to revive Germany’ s economic growth,” OECD Secretary-General Mathias Cormann added, when he launched the Survey in Berlin alongside Germany’ s Federal Minister for Economic Affairs and Energy, Katherina Reiche.“ Combining the reform of fiscal rules with ambitious measures to reduce administrative burdens for firms and regulatory barriers to competition, and address skilled labour shortages, can spur greater business dynamism and boost productivity and growth.”
Administrative burdens for firms could be alleviated through greater efforts to review, simplify and harmonise existing regulations and administrative procedures across levels of government. Greater adoption of digital tools in the public administration could also ease the burdens of business registration and administrative processes. To strengthen competition, occupational entry regulations and licensing requirements to open a business should be reduced, said the OECD.
Image: Shutterstock. com.
ICE 4 high-speed train at Berlin main railway station.
“ Skilled labour shortages should be addressed by improving work incentives for women, and older and lowerincome workers, as well as further reducing barriers to skilled migration and continuing to improve education and training policies. Key priorities include reforming the joint income taxation of couples to lower marginal effective income tax rates for second earners and restricting mini-jobs to students,” continued the OECD.
“ Designing policies to help regions embrace structural change is important for maintaining high living standards across the country. To unlock new opportunities for regions with slower growth and lower incomes, better coordination of placed-based, industrial and innovation policies is needed. Strengthening cooperation across municipalities would help to raise spending efficiency and improve administrative capacities,” it added.
Germany’ s economy has been resilient, but reforms are needed to unlock business dynamism and investment
In conclusion
“ What are the solutions to German stagnation? We think the country must address its economic development from two perspectives. It must look outside and drive European market integration, and it needs to look inside and foster long-term, future-oriented investment,” commented economist, Ulrike Malmendier, in a recent podcast.
“ No European country alone can be competitive with the large U. S. market— nor the Chinese, for that matter. Hence, Germany must actively push for greater European integration in goods, services, capital and energy markets. Rather than reacting to changes in U. S. economic policy, Germany and the European Union should focus on their existing strengths and actively pursue coordinated plans aimed at becoming economically stronger as an integrated single market,” she explained.
Several major trade shows in Germany are expected to unlock prospects and new opportunities for German machine tool manufacturers. These include Schweissen and Schneiden( Essen), EMO( Hannover) and Blechexpo / Schweisstec( Stuttgart).
Around 50 start-ups from eight countries were exhibiting at EMO Hannover 2025 from 22-26 September 2025 in Hanover, Germany. Established companies from the metalworking sector are generally keen to collaborate with startups, as they often have a reputation for pioneering new solutions to key challenges such as smart factories, digitalisation, AI-supported production optimisation and more.
“ With the Startup Area, we want to stimulate and inspire both sides, exhibitors and startups alike because our entire industry can benefit from different ways of thinking and approaches to solutions,” emphasised Dr. Markus Heering, Executive Director of EMO and Executive Director, VDW. n
64 | ismr. net | ISMR October 2025