According to the European Commission’s autumn forecast, the German economy will pick up speed next year, but will still remain just below the EU average. As can be seen from figures presented in Brussels, economic experts expect an increase in gross domestic product (GDP) of 1.2 percent for the Federal Republic of Germany in 2026. An average increase of 1.4 percent is expected in the EU, and an average increase of 1.2 percent in the countries with the euro common currency.
Overall, the forecast is friendlier than it was in the spring. In May, economic stagnation was predicted for Germany this year and GDP growth of 1.1 percent for 2026. The EU Commission now expects slight growth of 0.2 percent for the current year. However, this would mean that Germany would still be among the EU’s bottom performers in terms of economic development in 2025. Only for Finland is an even smaller increase in GDP forecast at 0.1 percent.
Increasing purchasing power
Regarding the figures, the EU Commission said that current company indicators and survey data point to continued positive momentum in the coming quarters. Even if the global economic environment remains difficult, a robust labor market, increasing purchasing power and favorable financing conditions support moderate economic growth. National austerity measures in member states could be partially compensated for by EU funds.
This support strengthens domestic demand, which is likely to be the most important growth driver over the entire forecast period, write the authors of the forecast. Private consumption is therefore likely to increase continuously – also supported by a gradual decline in the savings rate. At the same time, new dynamics in investment activities are also expected.
Geopolitical tensions weigh on outlook
The EU economic experts see US President Donald Trump’s customs policy and the trade conflicts with China as risk factors. Globally, trade barriers have reached historic highs and the EU is now faced with higher average tariffs on exports to the US than assumed in the spring 2025 forecast, the analysis says.
Still, tariffs on EU exports remained lower than those imposed on other major global players. The experts analyze that this gives the EU economy a slight relative advantage.
At the same time, a further escalation of geopolitical tensions could exacerbate supply shortages and a reassessment of risks in equity markets – particularly in the US technology sector – could affect investor confidence and financing conditions, according to their report. It is therefore also conceivable that the increasing frequency of climate-related disasters is weakening growth.
The EU outlook for 2027 is not significantly better than that for 2026. For the year after next, the Commission is currently forecasting economic growth of 1.5 percent, and for the euro area it is assuming an increase of 1.4 percent. An increase of 1.2 percent is predicted for the German economy, i.e. constant growth compared to the previous year.
Other economic forecasts are more pessimistic
With its forecast for 2026, the EU Commission is close to the estimates of the federal government, which recently expected growth of 1.3 percent for the coming year. Other economic forecasts predict that the German economy will grow less strongly in the coming year. In mid-October, the International Monetary Fund (IMF) announced that it expected an increase of 0.9 percent for the Federal Republic. The Council of Experts for the Assessment of Overall Economic Development also recently forecast growth of only 0.9 percent.
With this value, according to the current EU forecast, Germany would again be among the bottom performers in the EU next year, but would at least be on par with France and slightly ahead of Italy. According to Brussels figures, the weakest EU country in terms of growth could be Ireland in 2026 with an increase of 0.2 percent, and Malta the strongest with 3.8 percent. In the group of countries with large populations, Poland with 3.5 percent and Spain with 2.3 percent are the strongest.