Companies in Germany Investing Less

Companies in Germany have significantly reduced their investment plans. Investment expectations for the current year fell to -9.2 points in November, down from 2.4 points in March. “The profound structural shift and the lack of attractiveness of Germany as a business location are slowing down the companies’ willingness to invest,” says ifo economic expert Lara Zarges. “The continuing uncertainty regarding economic policy conditions is further increasing the reluctance to invest.” With a balance of -3.1 points, the investment expectations for the coming year are nevertheless not quite as pessimistic as they are for this year.

Manufacturing companies are lowering their investment expectations for the current year the most. The indicator fell in November to -17.3 points, down from +4 points in March. Expectations fell especially in vehicle manufacturing, from -11.4 to -36.7 points. The chemical industry also lowered its plans from +21.0 points to -9.4 points in November. Expectations in mechanical engineering deteriorated from +0.9 points in March to -15.3 points in November.

Manufacturing companies are also planning to reduce their investments in the coming year, although the balance of -6.9 points is higher than for 2025. Chemical companies are particularly pessimistic (-15.8 points). Vehicle manufacturing, on the other hand, does not expect to further reduce its investments (-1.3 points). In contrast to previous years, in which automotive manufacturers always increased their investments in software and research and development for the following year, they are cutting their plans for 2026 (-10.6 and -10.4 points). By contrast, they do want to invest slightly more in equipment (2.9 points). Man-facturers of data processing equipment, electronic and optical products are the only industry sector planning to increase investments across all capital goods in the coming year. The expansion of research and development spending in particular is driving their positive outlook for the coming year (13.1 points).

Investment expectations are also falling in trade, from -10.1 to -13.1 points for the current year, and companies also remain pessimistic for the coming year at -9.7 points. Service providers have likewise significantly lowered their plans for the current year, from +4.9 points to -3.1 points. They are the most optimistic for 2026 (1.1 points).