German retailers and Mittelstand face record low profits and investment confidence

A survey of 600 German retailers conducted by the German Retail Association (HDE) shows a deepening downturn. 42 % rate the current business situation as poor, 69 % report lower profits than a year ago and 65 % expect sales this year to be below 2025 levels. Only 18 % anticipate higher sales. The association warned that the situation is “even more dramatic than it already was in the rather modest previous year,” and called on the government to ease energy, labour and procurement costs while maintaining its modest 2 % nominal sales‑growth forecast for 2026.

At the same time, a DZ Bank and BVR survey of more than 1 000 German mid‑size firms revealed that investment willingness has fallen to its lowest point since the series began in 1995, with just 52 % planning any investment in the next six months. High energy, raw‑material and labour costs, together with supply‑chain uncertainties, are cited as the main obstacles. Many firms are shifting activity abroad, and the competitiveness of the German location is seen as eroding. As DZ‑Bank senior Stefan Beismann put it, the results “show how deep the uncertainty in the Mittelstand has become.”