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A recent study indicates that the German underground economy has reached its highest level in more than a decade. At the same time, Germany has accepted a new trade agreement between the EU and India. Latest updates.

A recent study reveals that Germany’s underground economy has reached its highest level in more than ten years. Germany is welcoming a new EU trade agreement with India.

Continue reading to discover what Germany is discussing on Tuesday, January 27:

Germany’s underground economy surges past €500B

Germany’s underground economy — encompassing earnings from unreported jobs and illicit activities like betting and certain types of sex work — totaled €510 billion ($606 billion) in 2025. This marked an increase of €30 billion compared to 2024.

The approximate numbers were obtained from a research project conducted by financial expert Friedrich Schneider of the University of Linz and the Institute for Applied Economic Research in Tübingen.

The research forecasted that the informal economy would increase by 5.5% to reach €538 billion in 2026.

The surge occurs alongside slow growth in the conventional economy and increasing joblessness. These two elements were seen as catalysts for the expanding informal sector.

The research also attributed the rise to the minimum wage increase starting in 2025 at €12.82 (which will go up to €13.90 on January 1, 2026), along with the adjustment in the income limit for what are known as mini-jobs. Schneider urged a reduction in related expenses for employers to address unregistered work — referred to in Germany asSchwarzarbeit, or black work.

A financial expert stated that these elements decrease “income from reported jobs and encourage undeclared or unlawful activities,” which subsequently reduces the tax revenue for the government.

At the same time, the research highlighted a reduction in VAT within the hospitality sector, noting that it decreased the motivation to engage in informal employment.

In 2025, the size of Germany’s underground economy amounted to 11.5% of its GDP, positioning it beneath the mean figure for 20 major developed nations.

Nevertheless, during the same period, the informal economy has expanded more rapidly than usual, rising by 2.4 percentage points since 2021, compared to an average increase of 0.8 percentage points.

Welcome to our coverage

Guten Tagfrom the newsroom in Bonn.

You are with us this morning as we present the latest news from Germany, beginning with a new study indicating that the country’s underground economy has grown to levels not witnessed in more than a decade.

For a summary of the leading German news stories from Monday, when a €1 million reward was announced for information regarding the attack on the Berlin power grid,check out yesterday’s blog.