One in three German companies plan job cuts in 2025, IW survey finds

BERLIN (Reuters) - More than a third of German companies plan to cut jobs in 2025, according to a survey by the German Economic Institute (IW) seen by Reuters on Friday.

The research institute's findings come as the number of unemployed people in Europe's largest economy approaches the three million mark for the first time in 10 years.

While there is some hope in the service sector, industrial businesses and construction firms remain particularly pessimistic, the survey among more than 2,000 companies showed.

Germany was the only member of the Group of Seven advanced economies that failed to grow for the last two years, and the tariffs announced by U.S. President Donald Trump will deal a major blow - possibly putting it on track for a third year of recession for the first time in post-war German history.

Although the U.S. tariffs were not yet active at the time of the survey, the export climate was already negative.

"Donald Trump's whims come at an inopportune time and are a severe test for the German economy," IW's head of macroeconomics, Michael Groemling, said.

The situation has been gloomy since autumn 2023, when the survey recorded more pessimists than optimists. At the end of 2024, business expectations were at their lowest since the global financial crisis in 2008.

Although the balance between optimists and pessimists had improved by this spring, the overall situation is still bleak, IW said. More than a third of the companies surveyed expect to invest less in the current year than in 2024, the survey showed.

(Reporting by Rene Wagner and Maria Martinez; Editing by Helen Popper)