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German Economy Faces Prolonged Downturn as Companies Cut Back on Investments

High energy costs, bureaucratic hurdles, and global trade uncertainties are deterring German businesses from expanding, with investment levels still below pre-pandemic figures.

Die deutsche Industrie hat es schwer. Unternehmen schließen vor allem energieintensive Anlagen.
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Overview

  • Only 24% of German companies plan to increase investments, while a third intend to reduce them, according to the latest DIHK survey.
  • Less than 20% of businesses are considering expanding their capacities, reflecting widespread hesitancy amid economic challenges.
  • Key investment deterrents include high energy costs, taxes, labor expenses, and lengthy bureaucratic processes.
  • The German economy remains 10% below pre-COVID investment levels, with GDP expected to stagnate in 2025 following two years of recession.
  • The government has announced measures to stimulate growth, but concerns persist over domestic demand and U.S. trade policies under President Donald Trump.