A significant survey released Monday by the Ifo Institute paints a concerning picture of the German business outlook, revealing widespread pessimism and a lack of confidence in the nation’s economic prospects. The findings indicate that nearly 26 percent of German companies anticipate a deterioration in their business conditions by 2026, a figure that underscores a prevailing climate of caution and uncertainty.
The survey data reveals a startling absence of optimism. A mere 15 percent of businesses surveyed express hopes for improvement, while a substantial 59 percent predict their economic situation will remain stagnant in the coming year. As Klaus Wohlrabe, head of Ifo’s surveys, bluntly stated, “There’s no sign of an upswing – the mood is very restrained”. He emphasized that barely any sector displays genuine optimism regarding 2026.
This skepticism permeates all sectors of the German economy. Within the industrial sector, a majority (55 percent) anticipate a stable, yet uninspiring, outlook, with 26.5 percent predicting worsening conditions. While the electrical equipment sector offers a slightly brighter note, with optimism marginally exceeding pessimism (27 percent versus roughly 13 percent), the overall trend is undeniably downbeat.
The service sector mirrors the industrial sentiment, with 63 percent expecting a stable situation, but a worrying 23 percent anticipating unfavourable developments. The retail sector exhibits particularly stark pessimism, with almost a third (32.5 percent) predicting a deterioration.
The construction industry, often considered a potential driver of growth, also presents a muted outlook. Despite anticipation for the government’s promised infrastructure investment package, a disappointing 33 percent of construction firms expect a worsening situation, while over half foresee no change. As Wohlrabe noted, the lack of resultant enthusiasm within the sector is “surprising” raising questions about the effectiveness of government stimulus measures and the general willingness of businesses to invest in the current climate. The data subtly suggests a deeper distrust in policy efficacy and a reluctance to commit to long-term projects amid the current economic uncertainty.
