A third of German firms plan job cuts in 2025

[BERLIN] Pessimism about the prospects for Germany’s economy is pushing one in three companies to consider job cuts this year, according to the German Economic Institute.

The think tank, which surveyed more than 2,000 companies in March and April, said that even though business owners are less gloomy about the state of Europe’s biggest economy than at the end of last year, the outlook for 2025 remains bleak, according to a release on Friday (Apr 18).

“Sentiment is particularly poor in the construction and manufacturing sectors,” it said. “Only in the services sector did optimists outnumber pessimists again.”

Germany’s economy shrank for a second consecutive year in 2024 on the back of weak global demand for its manufactured goods and the lingering effects of the energy crisis. Optimism over plans by the new government to ramp up spending has faded rapidly since the US started levying tariffs on cars.

Separate levies on the European Union are currently suspended, pending negotiations.

“The tariff war is placing an enormous strain on day-to-day business,” said Michael Grömling, the institute’s head of macroeconomics. “Donald Trump’s mood swings come at an inopportune time and are a real test for the German economy.”

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