Economic Outlook Remains Gloomy for Germany, Experts Warn
A recent report by the German Council of Economic Experts (Sachverständigenrat) has painted a bleak picture of the country’s economic prospects, with the group forecasting no growth in the German economy for the current year and only a 1% increase in 2026.
The council’s spring report, presented in Berlin, cited the US’s trade policy and the government’s financial package as the two major factors that will shape the German economy in the near future. The US trade policy, which has seen a surge in tariffs, is expected to further strain the already weak German export industry, leading to a decline in exports.
However, the council’s experts believe that the financial package, which will provide funds for infrastructure and state consumption, will have a positive impact on the economy from 2026 onwards. Private consumption is also expected to grow slightly stronger, driven by increasing real disposable income.
The report also forecast a moderate inflation rate, with the consumer price index (CPI) expected to rise by 2.1% in 2025 and 2.0% in 2026. However, the council’s experts warned that the inflation outlook is highly uncertain, citing the ongoing trade tensions and the potential for an expansionary fiscal policy in Germany, which could lead to higher inflation expectations and a tighter monetary policy from the European Central Bank (ECB).
The council’s experts also called for the government to accelerate the reduction of bureaucracy in Germany, citing the lack of tangible progress in reducing the administrative burdens on businesses despite numerous political initiatives. To achieve a meaningful reduction in bureaucracy, the council recommended a range of measures, including the automation of information duties, the acceleration of application and approval procedures, the digitalization of public administration and the establishment of a nationwide e-government portal.
The experts emphasized the need for new regulations to be effective, user-friendly and easy to implement, in order to avoid creating additional, inefficient bureaucracy.