Even though Trump has suspended the worst of his tariff increases on EU exports until the start of July, “a further escalation represents a significant risk for the German economy,” the panel warned.
The new government in Berlin, led by Chancellor Friedrich Merz’s center-right Christian Democratic Union (CDU), has announced plans to spend heavily on domestic infrastructure and defense, both of which should support what the panel called “a slow recovery in private consumption,” leading to anemic growth of 1 percent in 2026.
The forecast is in line with the European Commission’s prognosis and, if borne out, would mean Germany will have posted no growth for three consecutive years.
