Germany’s Economic Chill Deepens: Businesses Brace for Job Cuts in 2026

Germany is heading into 2026 with rising concerns over jobs as its prolonged economic slowdown continues to weigh on businesses. A broad survey of business groups shows that many expect workforce reductions next year, while only a limited number plan to hire. Employment levels across much of the economy are likely to stagnate, reflecting weak confidence in a near-term recovery.

The industrial sector faces the greatest pressure, particularly automotive manufacturing, paper, and textiles. These industries are struggling with weak exports, growing global protectionism, and high domestic costs that have reduced Germany’s price competitiveness. As a result, companies are tightening budgets and preparing for difficult decisions.

Investment plans remain muted, with few business groups expecting higher spending and many anticipating cuts or stagnation at already low levels. This hesitancy threatens to limit future productivity and growth.

Still, there are modest signs of stabilization. Some business groups expect production to improve in 2026, marking a cautious shift in sentiment. Defense-related industries and parts of the services sector stand out as relative bright spots, benefiting from higher government spending and improved demand.

Overall, Germany appears set for another challenging year focused more on stability than recovery.