The mood among German companies has worsened compared to a year ago, according to a survey conducted by the employer-affiliated Institute of German Economics (IW) in March. Reporting on the findings, the “Handelsblatt” noted that 43 percent of the surveyed companies reported a worse situation than a year ago, while only 14 percent reported an improvement.
The analysis indicated that the ongoing economic crisis in Germany remains evident in the overall poor business climate of German enterprises. Across industries, services, and the construction sector, the current situation was rated as “overall negative”. Furthermore, 35 percent of companies anticipate a decline in production for 2026, compared to just 21 percent expecting an increase.
Companies also do not anticipate increasing their investments as hoped. Among industrial businesses, 42 percent currently plan for lower investments, which is nearly double the 19 percent planning for higher investments. Across all sectors, 39 percent of the surveyed firms predict lower investment budgets for 2026, while 21 percent anticipate higher ones.
The report stated that the German economy is experiencing the longest period of negative business expectations in two decades-at least since the release of overall national results starting in 2005.
Furthermore, the poor economic situation is expected to lead to further job cuts, particularly in industry. The analysis noted that the decline in the industrial sector is set to continue, with 37 percent of industrial companies planning to reduce their workforce, compared to 14 percent planning to expand it.