BERLIN – German Chancellor Friedrich Merz said that restoring economic growth will be the government's top priority in 2026. At the same time, he admitted that the steps taken so far have not been sufficient to strengthen Germany's competitiveness.
In a letter sent to members of his governing coalition at the beginning of the year, Merz described the economic outlook as „very critical in some areas“.
According to him, Germany will have to focus on decisive political and legislative measures in 2026 that will significantly improve conditions for businesses. Only in this way can the economy return to growth, the Chancellor wrote.
The German economy slumped in both 2023 and 2024. Winter forecasts by several major German economic institutes published in December 2025 predict growth of only 0.1 per cent in 2025. They point to weakening foreign demand, including a significant decline in exports to the United States.
Analysts said that Germany's economic recovery has been hampered in the long term by high energy prices, weak global demand and slow structural reforms. Another burden for exporters was the increase in US tariffs in 2025.
Since taking office in May 2025, Merz has promised to revive Europe's largest economy through massive public spending and higher investment in defence and infrastructure. His government recognises that economic recovery will take time and has introduced tax cuts and other reforms. However, business associations argue that the pace of change is still too slow.
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