Self-employment on the rise in Germany amid economic downturn

The number of self-employed people in Germany rose by 18% to around 690,000 in 2025 from 585,000 the year before, the state-owned KfW development bank reported on Monday on the basis of a representative survey.

One reason given for the rise in people starting their own businesses amid the economic downturn and inflation is the increase in the number of people taking on sidelines to make ends meet. This rose to 483,000 from 382,000, according to the KfW. There was little change in those in full-time employment.

The proportion of sideline businesses started up rose to a record 70%.

KfW chief economist Dirk Schumacher attributes the increase in part to the rising cost of living. "Access to the labour market has become more difficult. A little sideline is no longer easy to find. Self-employment can be an alternative way to make extra money," he said.

The study, which was based on 30,000 phone and 20,000 online interviews, used a broad definition of business starters, taking in people becoming self-employed full-time or part-time, whether as freelancers or working for a company.

It found that most business starters were self-employed out of conviction, with two thirds seeing their situation as permanent. Most are small-scale, with only 24% having staff, and most are new businesses, with just 10% being takeovers.

"Germany needs young and innovative businesses," Schumacher said, while also pointing to the need for stability. Around 545,000 medium-sized businesses were seeking a successor by the end of 2029, he said.

Germany needed more people willing to take over an established business, he said.