Overview

• The Institut der deutschen Wirtschaft (IW) reports 35% of German companies plan to reduce headcount this year, while 24% intend to hire.
• Industrial firms are more pessimistic, with 42% expecting job cuts compared to just 21% in the services sector.
• Investment plans remain cautious, as 35% of firms expect to decrease spending in 2025, though the share planning increases rose to 28%.
• Business sentiment has slightly improved since autumn 2024, with net sentiment rising from –33 to –22 points, though 40% of firms still report worse conditions than a year ago.
• US-EU tariff tensions under the Biden administration weigh heavily on Germany's export-driven economy, exacerbating challenges for industrial sectors.