Berlin is preparing to cut Germany's 2026 growth forecast from 1% to 0.5%, as the impact of the US-Iran war on energy prices derails hopes of a recovery. The downgrade would leave Europe's largest economy on the brink of a fourth consecutive year of de facto stagnation, even as a €1tn debt-funded public-spending push ramps up.

The economy ministry said growth lost "noticeable momentum" in Q1 2026 against the backdrop of the Middle East conflict. Chancellor Friedrich Merz announced a €1.6bn package to ease rising fuel prices. Commerzbank chief economist Jörg Krämer now sees just 0.3% working-day-adjusted growth in 2026, versus 0.4% in 2025, what he calls "a black zero". Goldman Sachs estimates the €1tn fiscal push will add only 0.5 percentage points to 2026 GDP.

Germany's energy-intensive chemicals industry is hit hardest: production is back to late-2004 levels (Bundesbank data), and companies are closing sites amid low capacity utilisation. Q1 insolvencies reached their highest level in more than 20 years, exceeding the 2009 financial-crisis peak, and unemployment is now 30% above pre-pandemic levels. Ifo head Clemens Fuest warns "stagnation is the new normal". Source: Financial Times, 17 April 2026, Olaf Storbeck and Anne-Sylvaine Chassany.