Germany’s monthly industrial job losses have surged to 15,000, up from 10,000 last year, according to labour market researchers. Major firms like Volkswagen and Bosch are shedding roles while redirecting investment to lower-cost sites in Spain and Hungary. This accelerating deindustrialisation has galvanised the political class in Berlin, with coalition partners promising a reform blueprint before the summer recess. Yet, beneath the urgency, the path to restoring competitiveness remains contested.

Viewed from Tehran, the crisis takes a different shape but stems from similar structural vulnerabilities. Iran’s automotive industry, long warped by state-imposed price controls, recently saw a symbolic shift with the transfer of Iran Khodro’s management to the private sector. However, hopes for a market-driven revival are dimming. A closely watched purchasing managers’ index remains stubbornly below the 50 mark, signalling a sustained contraction in manufacturing and services. The real-economy toll is starkly reflected in the rising number of child labourers swept up by the downturn.

Economists in London highlight how both economies exemplify the global struggle to adapt industrial policy to an era of supply-chain realignments and price pressures. In Germany, high energy costs and regulatory drag are accelerating offshoring; in Iran, international sanctions compound decades of mismanagement. Yet Iranian business chambers argue that domestic reforms—improving productivity, curbing corruption, and stabilising regulations—are as critical as any diplomatic breakthrough. Their German counterparts, meanwhile, warn that without swift government action, Europe’s manufacturing core could permanently hollow out.

The forward-looking calculus is unforgiving. For Berlin, failure to arrest the investment outflow risks eroding the Mittelstand backbone and feeding political populism. For Tehran, continued contraction threatens social cohesion beyond the already visible cracks. Both governments are navigating a narrow corridor between long-term restructuring and short-term political survival—a dynamic that will define their economic trajectories for years to come.