A change in mood is taking its time.

The German economy has not yet achieved a turnaround in 2025. The ongoing economic crisis is reflected in the persistently poor business climate of German companies, as shown by the regular business survey conducted by the German Economic Institute (IW).

The German economy has not yet achieved a turnaround in 2025. The ongoing economic crisis is reflected in the persistently poor business climate of German companies, as shown by the regular business survey conducted by the German Economic Institute (IW).

Business expectations for 2026, based on the IW Business Survey from October 2025, are even slightly worse than the outlook for 2025 according to the spring survey: A quarter of the companies surveyed by the IW anticipate higher production or business activity in 2026 than in 2025, but almost a third expect a decline. This means the negative balance has increased from just over -3 percentage points in the spring to almost -7 percentage points. Based on a comparison of the current expectations with the history of the IW Business Surveys, a shift in sentiment among German companies and a significant economic turnaround with a pronounced upswing are not apparent. Production expectations for 2026 are particularly negative in the industrial sector, suggesting another difficult year for industry in Germany. Private-sector service providers are also pessimistic about the coming year. In contrast, the construction industry has a balanced outlook for 2026. Overall, despite the announced investment programs in the private sector, less investment is expected in 2026: 33 percent of all companies are planning lower investment budgets, while only 23 percent plan for higher ones. The long-standing investment crisis in German industry is expected to worsen, further straining the industrial base. Regarding employment prospects for 2026, all three major economic sectors paint a negative picture. At 36 percent, the proportion of private companies in Germany planning to reduce staff is twice as high as the proportion planning to increase their workforce. The job losses in industry that have already occurred over the past three years will continue in 2026: 41 percent of industrial companies plan to reduce staff, while only 15 percent plan to increase their workforce. Among private service providers, one-fifth intend to hire additional staff, while more than one-third plan to reduce their workforce.