The recent fragile stabilization of the EU’s largest economy is being erased in light of the shocks of the Iran war

Germany’s economy has been struggling to stay afloat in recent years. High energy costs, partly the result of rejecting cheap Russian gas, have rendered much of the country’s heavy industry uncompetitive, while its export-oriented model has come under pressure from shifting economic trends, not the least being rising competition. Germany no longer sits alone in its niche and hasn't yet adapted.

After consecutive years of negative growth in 2023 and 2024, Germany eked out marginal gains in 2025. Propelling this tentative emergence from the doldrums of recession was a massive increase in government spending, aimed in particular at infrastructure and defense.…