German Companies Anticipate Growth Amid Defense Spending Boon and Trust Challenges

Germany's economy is experiencing a notable upswing in order intake driven by increased defense spending from a newly introduced special fund, alongside rising structural challenges and trust issues within the workforce and broader society. According to a representative survey conducted with German businesses in 2025, order intake surged by 9.5% in the fourth quarter compared to the previous period—the largest growth in two years—largely benefiting the defense industry. Approximately 21% of companies expect to profit from the special fund, with manufacturing firms anticipating the strongest gains at nearly 29%. Nearly half of the firms foresee revenue increases tied to additional government outlays, whereas about 20% predict difficulties in recruiting skilled workers amid intensified competition for talent.

However, the broader economic outlook is also clouded by a deepening trust crisis and future pessimism. The latest Edelman Trust Barometer 2026 reveals that only 8% of Germans believe the next generation will enjoy better economic conditions, a six-point drop from the previous year and one of the lowest confidence levels internationally. Although employees maintain relatively high trust in their employers (74%), trust in institutions like government (42%), media (46%), and the economy overall (48%) remains stagnant or weak. More than half of workers fear job loss due to a looming recession, while geopolitical tensions have increased concerns about trade conflicts impacting business.

The survey also highlights a growing societal insularity: 81% of Germans distrust people with differing values or sources of information. Nearly half of employees express that political differences with managers would reduce their engagement, and a third would seek to avoid supervisors with opposing views. Nils Giese, CEO of Edelman Germany, warns this fragmentation threatens innovation and teamwork vital for businesses facing economic transformation.

Despite this complex backdrop, two-thirds of companies feel adequately staffed to manage new order volumes, though about 22% anticipate needing more personnel, especially in manufacturing sectors. While 19% anticipate workforce reductions, only a small portion of companies expecting benefits from the special fund predict layoffs. Experts suggest effects of the defense-related special fund investments are medium-term, implying the current uptick in orders is an early indicator. German firms will need to adopt multifaceted strategies for workforce development and recruitment to overcome skills shortages and fully leverage emergent opportunities.