It is not an expert opinion like any other that will be published on this Thursday: The five major German economic research institutes present their 150th report. And at the same time, the forecast should rarely have been affected with as much uncertainty as this time. On the one hand, the global economy is very violent. Nobody knows whether US President Donald Trump’s erratic customs policy will lead to a global recession or even a financial crisis after his recent turn, which could also hit Germany violently. At the same time, a new federal government has just formed. Anyone who will lead the Federal Ministry of Economics in the future, what exactly the new coalition is economically tackled and which announced measures can really be financed: everything is unclear.
In any case, the new black and red government cannot count on a surprising economic tailwind. In their spring report for this year, the experts only expect mini growth for Germany of 0.1 percent, although the possible negative customs effects of the latest measures have not yet been taken into account. In September there was still an increase of 0.8 percent. After all: after two years without growth there could be a very small plus. In 2023 Europe’s largest economy had shrunk by 0.3 percent, in 2024 again by 0.2 percent. For 2026, the institutes still assume a strong plus of 1.3 percent.
But that’s not sure either. “Significant risks to economic development in Germany are based on the US trade policy,” says the report. The US’s customs policy continues to indicate an escalation. “The negative effects on both economic areas should then be significantly stronger than in this forecast,” it says. However, negotiations between the EU and the United States could also defuse the transatlantic conflict, “up to a complete waiver of bilateral tariffs”. In the night of Thursday, US President Trump had released many tariffs again, initially for 90 days.
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The Federal Government serves the spring forecast as the basis for its new projections, which in turn form the basis for the tax estimate, i.e. for the question of how much money is available at all. It is created by the RWI in Essen, the IFO Institute in Munich, the Institute for the World Economy (IFW) in Kiel, the IWH in Halle and the Berlin German Institute for Economic Research (DIW).
The government plans of the Union and the SPD would hardly be able to solve the problems of the German economy, said Stefan Kooths from the Kiel Institute for the World Economy: “The mere processing of the coalition agreement alone will hardly be enough.” There were bright spots that showed that the parties had recognized the core problems. The planned super depreciations are mentioned, for example. However, the lack of solutions in the social security systems and for work incentives are problematic. Overall, the Union and the SPD would have taken measures to combat symptoms rather than a real change, according to the criticism.
The institutes also expect that hardly any additional funds for defense and investments will be called up this year. At the same time, consolidation steps could be avoided that would have been necessary without the change in the financial constitution. “The funds from the additional debt rooms are likely to work gradually, but threaten to displace private consumption and private investments,” warn the economists.
German companies have a hard time fighting
For 2026, the economists then expect additional expenses for investments of around 24 billion euros, so the calculation, according to the calculation, could increase the gross domestic product by an additional 0.5 percentage points. But the experts also say: Small economic areas benefited from additional expenses for defense and infrastructure, but which are already well utilized, the prices there could continue to rise there and result.
“In addition, German companies are exposed to increased international competition-especially from China,” says Torsten Schmidt, RWI economist. Last but not least, structural weaknesses such as the shortage of skilled workers and high bureaucratic hurdles would burden the growth forces. In addition, there would be an energy crisis, a dwindling personnel population and high bureaucratic effort.
Against this background, an increasing unemployment is expected. The situation on the job market has already deteriorated noticeably anyway, is in the report. Since mid -2022, the number of unemployed has increased by 20 percent, and the unemployment rate increased from five percent to 6.3 percent. For the coming months, the institutes assume that unemployment will continue to increase. Only when the economic situation improves in the course of 2026 can it be assumed that unemployment will fall out. At the same time, only a slight weakening of inflation is expected. The phase of key interest rates will soon come to an end, it is said.
But as I said: everything can turn out very differently.
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