THE war in Iran is choking off hopes of an economic recovery in Germany that had emerged at the beginning of the year, with businesses assessing their situation as negatively as they did during the pandemic, a survey showed yesterday.
More than one in four companies describe their situation as poor, while 23 per cent describe it as good, according to a survey of around 23,000 companies across all sectors and regions conducted by the German Chamber of Commerce and Industry, or DIHK.
Companies’ outlooks have also darkened. One third expect business to worsen over the next 12 months – 8 percentage points more than at the beginning of the year.
Only 13pc are still looking to the future with optimism, the survey showed.
“We are stuck in a dual crisis,” said DIHK managing director Helena Melnikov. “In addition to Germany’s structural problems, there are now the economic consequences of the war in the Middle East.”
Due to the poor results, DIHK lowered its economic growth forecast for 2026 to 0.3pc from 1pc at the beginning of the year.
A separate survey published yesterday by economic institute Ifo showed that sentiment in the German export industry has also deteriorated.
“The outlook remains challenging,” said Timo Wollmershaeuser, head of forecasts at Ifo. “Geopolitical uncertainty remains high.”
Meanwhile, a survey by the Nuremberg Institute for Market Decisions (NIM) showed Germans are largely opposed to raising value-added taxes to finance income tax relief, with many saying such a move would make them save more rather than spend.
In the study, respondents were presented with a scenario in which income tax was cut by €100 ($108) per month while higher VAT added €40 in monthly costs. Only one in four viewed such a reform positively, while 42pc assessed it negatively.
Germany plans an income tax reform from early 2027, with some experts proposing a VAT increase from 19pc to 21pc to help finance it.
Opposition was strongest among older people and those on low incomes. Among respondents with less than €2,000 available per month, 18pc supported the idea and 48pc opposed it. Even among those with incomes of 4,000 euros or more, opposition outweighed support.
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