Berlin. The federal government’s investment stimulus measures have not yet significantly boosted private investment. According to the DIHK, investment levels in the first quarter remained around twelve percent below pre-pandemic figures. While private investment in equipment rose by 3.3 percent compared to the previous quarter, the Federal Ministry for Economic Affairs notes that this growth was driven primarily by a strengthening export sector. At the same time, unresolved structural issues—such as high costs, bureaucracy, and a lack of planning certainty—continue to hinder a broad wave of investment in Germany.
Investment boost meets unresolved location-related challenges
Since July 2025, companies have been able to write off movable assets for tax purposes more quickly. Declining-balance depreciation of up to 30 percent is permitted, and the rule applies to acquisitions made through the end of 2027. For new electric company cars, firms can even write off 75 percent of the cost in the year of acquisition.
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The investment booster thus improves the financial outlook for companies with planned acquisitions. However, it does not generate additional orders or reduce ongoing location-related costs. The DIHK is therefore calling for lower costs, less bureaucracy, and faster administrative procedures. Furthermore, Germany needs to modernize its infrastructure and once again provide companies with greater planning certainty.
Industry remains sluggish in investment despite initial signs of improvement
The ifo Institute confirms the fundamental weakness of German industry. In late July, researchers identified the low level of investment activity as a structural problem. Major sectors such as mechanical engineering and the automotive industry, in particular, have so far failed to generate sufficient momentum. In contrast, the pharmaceutical industry, metal production, and segments of vehicle manufacturing are reporting some major projects.
Even the investment booster has not yet overcome these disparities. According to the ifo Institute, the overall willingness to invest remains weak for 2026. At the same time, new projects are heavily concentrated in specific sectors and large enterprises. Consequently, their investment activity has not yet been sufficient to trigger a broad-based turnaround for the industrial sector.
Economic recovery remains weak
The broader economy has also failed to provide a strong boost to demand so far. Gross domestic product grew by just 0.2 percent in the second quarter of 2026 compared to the previous quarter. Nevertheless, business sentiment improved slightly in July. The ifo Business Climate Index rose to 86.6 points, even though companies assessed their current situation somewhat less favorably.
Consequently, the federal government is also banking on lower corporate taxes starting in 2028. The corporate tax rate is set to fall gradually from 15 percent to 10 percent. This is expected to bring the total corporate tax burden down to just under 25 percent by 2032. In the short term, however, the decisive factor remains whether companies see sufficient reasons to invest in new capacity in Germany. After a year, the data show no signs of a broad-based surge in investment.
Author: Blackout News
Sources: DIHK (14.08.26) – Handelsblatt (13.08.26) – Statistisches Bundesamt (30.07.26) – Ifo Institut (24.07.26)