Tanja Gonner, director general of BDI, told dpa the situation for the industry was critical. However, there was plenty of opportunity to turn things around, she said "I am convinced that if we do our homework, we will have every opportunity again. Innovation has long been a top priority for many companies."

Gonner said investing in new technologies, such as artificial intelligence, was vital.

"We have every opportunity, especially in industrial production," Gonner said, adding that businesses need policy conditions that encourage investment and support industrial transformation.

"Germany has lost ground in terms of competitiveness," said the former conservative politician. Every political decision in Germany and Europe should therefore be judged by a simple test: "Does it contribute to competitiveness? Does it help companies become more competitive again?"

Geopolitical developments, like US tariff policies and China's growing industrial dominance, were also weighing on the industry, she said.

These challenges have emerged at a time "when we really ought to be heading to the gym to work off the excess weight we've put on over recent years," Gönner said, arguing that the combination of structural weaknesses and external pressures is placing Germany's business environment under exceptional strain.

The BDI represents around 100,000 companies, which together employ more than 8 million workers.