German industry survey warns almost one-third of firms will cut workforce in 2027

Résumé détaillé

About one third of German companies plan to implement workforce reductions in 2027 as sluggish industrial output and weak capital investment undermine...

An excursion boat sails on Lake Koenigssee amid autumn colours in Schoenau am Koenigssee, southern Germany, on November 7, 2026. (Photo by Kerstin Joensson / AFP)

About one-third of German companies plan to implement workforce reductions in 2027 as sluggish industrial output and weak capital investment undermine economic recovery in Europe’s largest economy, according to a survey published Tuesday.

The German Economic Institute (IW) surveyed more than 1,000 companies in October and found that 32 percent expected to reduce their workforce in 2027, up from 29 percent in the spring survey. Only about one in six planned to hire more workers.

Nearly 40 percent of companies intended to cut investment, while 80 percent expected their output to remain flat or fall from 2026 levels, the Cologne-based institute said.

Germany's economy grew faster than expected in the first half of the year after years of stagnation, but the recovery has since lost momentum. Gross domestic product expanded by 0.2 percent in the third quarter, down from 0.3 percent in the second quarter and 0.4 percent in the first, data from the Federal Statistical Office showed.

The survey comes as German companies face renewed cost pressures following months of rising energy prices triggered by the conflict in the Middle East.

Germany's industrial sector has been hit particularly hard, with a brief recovery earlier this year failing to take hold, the IW said. Some 47 percent of industrial companies reported worse business conditions than a year earlier, compared with 43 percent in the spring survey.

The construction sector also faces rising energy prices and higher borrowing costs. The energy crisis has pushed up inflation and interest rates, making construction projects more expensive to finance.

About 26 percent of construction companies expected to cut output next year, while the sector's gross value added remained more than 20 percent below its 2019 level, the institute said.

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