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A majority of German business associations expect job cuts in 2026 as the country’s economic crisis persists, with industry hit hardest by global protectionism and weak exports, a survey by the German Economic Institute IW showed on Monday.
Of 46 business associations surveyed, 22 anticipate workforce reductions next year. Only nine expect to increase hiring and 15 foresee stable employment levels.
The automotive, paper and textile industries are among those expecting production declines. They have been hurt by rising protectionism, weak exports and high domestic costs that have eroded Germany’s price competitiveness, the survey found.
“Those who hoped for a swift and comprehensive end to the economic crisis will also be disappointed in 2026,” said IW director Michael Huether. The economy is “stabilizing at a lower level,” he added.
Investment plans remain subdued. Just 11 associations expect increases while 14 anticipate cuts and 21 see stagnant investment at low levels, the survey showed.
Bright Spots
Some bright spots emerged in sectors benefiting from increased defense spending, including aerospace and shipbuilding. Services also reported improved conditions compared to last year.
Business sentiment showed modest improvement, with 19 associations expecting higher production than in 2025 versus nine anticipating declines. This marks the first positive outlook balance in years.
(Reporting by Maria Martinez, editing by Kirsti Knolle)
