The sentiment among German companies is currently worse than it was a year ago, according to a survey conducted by the employer-oriented Institute of the German Economy (IW) involving 964 firms, which the “Handelsblatt” (Thursday edition) reported on. Specifically, 43 percent of the surveyed companies reported a decline in their situation compared to last year, while only 14 percent reported an improvement.
The analysis notes that the persistent economic crisis in Germany continues to manifest as an overall poor business situation for German companies. In both the industrial, service, and construction sectors, the current conditions are generally assessed as negative. Furthermore, 35 percent of companies anticipate a drop in production for 2026, compared to only 21 percent expecting an increase.
Beyond their outlook, companies are also less inclined to invest than hoped. Among industrial enterprises, those planning lower investments account for 42 percent, which is nearly double the 19 percent planning higher investments. Across all sectors, 39 percent of the surveyed firms project lower investment budgets for 2026, while 21 percent anticipate higher ones.
The report states that the German economy is in a period of negative corporate expectations that is at least the longest in 20 years-specifically concerning aggregated national results since 2005.
Consequently, the poor economic climate is also predicted to lead to further job losses, particularly within industry. The analysis indicates that the decline in the industrial sector is expected to continue, with 37 percent of industrial firms planning to reduce their workforce, and only 14 percent planning to increase it.
