BERLIN / LONDON (IT BOLTWISE) – The German economy faces a challenging 2025 with forecast growth of just 1.3 percent. Despite planned investments in infrastructure and defense, there is a risk of job cuts and a decline in the willingness to invest in industry. The federal government is planning tax relief to stimulate investment.
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The German economy will be confronted with a variety of challenges in 2025. Despite planned investments in infrastructure, climate and defense, only weak growth of 1.3 percent is expected. This forecast reflects the ongoing difficulties facing German industry, particularly in relation to high energy prices and rising social security contributions.
A survey by the German Economic Institute (IW) in Cologne shows that many companies are considering job cuts. This is particularly worrying as the German economy has not experienced any significant growth in recent years. After a decline in the spring, gross domestic product also stagnated in the third quarter, which further increases uncertainty in the industry.
Companies’ willingness to invest remains subdued. For the coming year, 33 percent of the companies surveyed are planning on decreasing investment budgets, while only 23 percent believe in increasing budgets. This reluctance could further exacerbate the long-term lack of investment in German industry and have negative effects on the labor market. The industrial job losses that have already begun over the last three years are expected to continue.
In order to counteract these developments, the federal government has decided on tax relief that is intended to stimulate investment. Nevertheless, business associations are pushing for far-reaching structural reforms to strengthen the competitiveness of German industry. Given the challenges posed by trade conflicts and geopolitical uncertainties, it is crucial that the German economy demonstrates its innovative strength and adaptability.
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