The German business sector is showing alarming trends ahead of 2027. Despite certain temporary improvements in the economy, a significant portion of companies is preparing for strict austerity. According to the German Institute for Economic Research (IW), 32% of enterprises are already considering the possibility of reducing their staff.
Investment activity is falling
The situation with companies' financial plans also remains consistently negative. Nearly 40% of the surveyed organisations intend to reduce the volume of investments. In contrast, only one in six companies has plans to hire new personnel, indicating a general restraint on workforce expansion.
Results of the October 2026 survey
The study was conducted among over a thousand enterprises in October 2026. The main conclusions of the analysts are as follows:
- 80% of companies expect that production volumes will remain at the same level or decrease next year.
- The most difficult conditions prevail in the construction sector and industry.
- Among industrial enterprises, 47% assess their current position as worse than a year ago.
- Nearly 30% of industrial companies are preparing to reduce the number of jobs.
Impact of external factors
Experts link the deterioration of economic forecasts to the military conflict with Iran. Against the backdrop of this situation, there has been a rise in energy prices, increased inflationary pressure, and higher costs of credit resources. These factors significantly increase business operating costs, complicating decisions on new investments and the expansion of production capacities.
Expert warning
Michael Gromling, head of the economic research department at IW, warned that current signs of improvement may be short-lived. He emphasised that such pessimistic expectations from German companies were last recorded in 2005. According to the expert, if the enterprises' forecasts come true, 2027 may be accompanied by further job cuts and reduced investment activity.
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