A survey released Monday by the Ifo Institute reveals a pervasive sense of caution and pessimism among German businesses, pointing to potential headwinds for the nation’s economy through 2026. The findings suggest a widespread lack of confidence, defying hopes for a robust recovery.
The poll indicated that approximately 26% of German companies anticipate a deterioration in their business performance by 2026. A significant 59% expect no change in their economic situation over the coming year, while a mere 15% harbor expectations of improvement. “Businesses remain exceptionally restrained – there’s no sign of an optimistic surge anywhere” stated Klaus Wohlrabe, Head of Ifo Surveys, underlining the lack of palpable enthusiasm across sectors.
The gloom isn’t confined to any specific industry; rather, it reflects a broadly held sentiment. Within the industrial sector, 55% of companies foresee an unchanged situation in 2026, with 26.5% bracing for a decline. Only 18% express optimism. The electrical equipment sector presents a marginal exception, where roughly 27% of businesses are optimistic, slightly exceeding the pessimism (around 13%).
Service providers mirror this trend – 63% expecting stability, 23% anticipating a negative development and only 14% hoping for improvement. The retail sector stands out with particularly disheartening projections, with 32.5% anticipating a decline.
Further complicating the picture, even the construction sector, purportedly poised to benefit from the government’s announced infrastructure investment package, demonstrates a subdued outlook. A worrying 33% of construction firms predict a worsening situation, with 56.5% expecting no change and a meager 10% anticipating an improvement. Wohlrabe noted that this lack of exuberance is “surprising” suggesting the promised infrastructure boost has yet to translate into tangible confidence among builders. The muted reception raises questions concerning the effectiveness of government stimulus plans and the broader underlying concerns affecting business sentiment within Germany.