If German politicians' salaries were linked to private sector growth, lawmakers would likely have to take out loans in the deeply recessive year of 2025 and compensate citizens for parliamentary inaction and ideological foolishness.

Although the term diät derives from the Latin dieta, loosely meaning "compensation," in the context of Germany's collapsing industry it more accurately reflects the German meaning: deserved frugality and material austerity. Economically, Germany is now facing the end of the illusion of prosperity, which follows the catastrophic policies of the government.

Shrinking Private Sector and Rising State Burden 

After eight months under Chancellor Merz, the record is not just meager—it is pitiful. Assuming a 50% state quota and calculating real GDP growth of 0.2% with net new debt over 4%, the net result for 2025 is a roughly 3.8% contraction of the private sector compared to the previous year.

What is scarcely known in Berlin—likely a form of economic esoterica not taught in party seminars or union courses—is that only the private sector produces the goods and services people actually consume. It is no surprise that heavy regulation and crushing taxes—Germany is surpassed only by Belgium in the OECD in fiscal extraction—strangle private enterprise.

Investment fell roughly 6.5% below long-term averages—a quantum leap in the wrong direction, deeply impacting labor markets, public budgets, and social security. While Finance Minister Lars Klingbeil attempts to mask deficits and exemptions as mere cosmetic fixes, municipalities face a €35 billion shortfall this year.

Crisis Becomes Visible 

At the lowest levels of the state, in cities and towns, the bill for decades of political mismanagement is now arriving first.

The trigger is collapsing business tax revenue, a direct result of a record number of corporate bankruptcies: 24,000 companies will have exited the market in 2025.

The labor market's seeming stability is misleading. Hundreds of thousands of new public sector jobs and age-related retirements obscure the collapse of the real economy in official statistics. Merz executed the debt brake with the outgoing Bundestag in April, catapulting Germany into a debt spiral with a €500 billion special fund—a clear indication that policymakers knowingly ran the economy into a wall.