Frankfurt – A new survey released Monday shows that business confidence in Germany dropped more than expected in November, adding to concerns that companies are losing trust in the government’s plans to boost the economy.
The Ifo Institute reported that its business climate index slipped to 88.1 points from 88.4 in October. Analysts had expected a small drop, but not this much.
Ifo president Clemens Fuest summed it up simply: “Sentiment among companies in Germany has deteriorated. They have little faith that a recovery is coming anytime soon.”
Germany has been stuck in a tough economic period for about two years, dealing with weak demand and an industrial slowdown. Earlier this year, Chancellor Friedrich Merz promised a big push to revive growth, including major public spending and new reforms.
But many critics say the plans are moving far too slowly. Political disagreements, complicated processes, and delays are making it hard to get anything done.
In the latest survey, expectations for the future fell sharply. LBBW economist Jens Oliver-Niklasch said this drop is “alarming,” adding that Germany hasn’t made real progress since the summer. He also noted that the promised “autumn of reforms” hasn’t shown up.
The manufacturing sector, which is a key part of Germany’s economy, saw a big hit to expectations. Companies also said they are seeing fewer orders. Confidence slipped in the trade and construction sectors as well.
There was one bright spot: the service sector. Sentiment there improved again, giving at least a bit of positive news.
Despite the disappointing numbers, some economists remain hopeful. Dirk Schumacher from KfW pointed out that business expectations have generally improved over the year. He said growth could return once conditions stabilize, with stronger gains expected in 2026, helped by government spending.
For now, the government expects the economy to grow by only 0.2 percent this year and by 1.3 percent in 2026.
