Overview
- IMK projects German GDP growth of about 1.2% in 2026 after three weak years but stresses the upturn remains fragile.
- Public talk of cuts to pensions, health and social benefits is raising uncertainty, lifting saving and damping consumption, with car demand still historically low despite real wage recovery.
- An export-led rebound looks unlikely as U.S. tariff policy and China’s protective industrial strategy hit German automakers and medium-sized machinery firms.
- The report calls for genuinely additional, faster public investment in infrastructure, power grids, broadband and education, alongside active European industrial policy for EVs, batteries and semiconductors.
- Researchers defend climate measures as competitiveness-critical, criticize the limited additionality of the €500 billion infrastructure fund, warn against carving out defense from the debt brake, and argue ECB rate cuts are warranted as inflation nears target.