The German Council of Economic Experts on Wednesday cut its forecast for Europe's largest economy in 2026 and predicted only modest growth this year, despite Chancellor Friedrich Merz's pledge to revive the economy.
The economists cut their forecast for 2026 to 0.9% from 1.0% in their earlier May report, arguing that a spending boost rolled out by Merz's government will only have a small impact on growth.
"In light of current challenges, Germany must develop new perspectives for growth and security policy," said the council's chair, Monika Schnitzer, in Berlin. "The opportunities arising from the special fund for infrastructure and climate neutrality must not be squandered."
After winning the election in February, Merz has given Germany more financial firepower through taboo-busting fiscal reforms. But some of the funding is being used to prop up day-to-day spending rather than growth-boosting infrastructure, drawing criticism.
For 2025, the experts did raise their growth forecast slightly from 0.0% to 0.2%, but stressed that after two years of recession, the German economy is still stagnating this year, due to lacklustre private investment and weak exports.
With economic growth stagnating, surveys show Merz is one of the least popular chancellors in memory, with ratings of 25%, far behind those of his two predecessors at the same point.
"The tentative recovery that seemed to be emerging in manufacturing in the summer of 2025 has fizzled out," Schnitzer said.
(Reporting by Maria Martinez and Reinhard Becker; editing by Matthias Williams)
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