German Companies Face Record-High Business Uncertainty Amid Geopolitical and Policy Challenges in Late 2025
German companies in late 2025 face record-high uncertainty due to geopolitical risks, unclear policies, and rapid technological change, with industrial firms most affected.
- • 77.8% of German companies find it hard to predict business development as of October 2025, up from previous months (ifo Institute).
- • Nearly 90% of industrial firms and 85.3% of retail companies report planning difficulties amid high uncertainty.
- • Expert Klaus Wohlrabe links uncertainty mainly to geopolitical risks and unclear government policy signals during the 'autumn of reforms.'
- • Innovation experts highlight that modern companies must enhance innovation skills and scenario planning to adapt to rapid, unpredictable changes.
- • Historical uncertainty levels were considerably lower before the COVID-19 pandemic, indicating a significant shift in the business climate.
Key details
A recent ifo Institute evaluation reveals that German companies are grappling with unprecedented uncertainty about their business prospects. As of October 2025, 77.8% of firms reported difficulty in predicting their future development, marking an increase from 75.4% in September and 72.2% in June. This current uncertainty is the second highest recorded since the COVID-19 pandemic began.
The industrial sector is particularly vulnerable, with nearly 90% of companies struggling with business planning. Retail companies also express significant doubts, with 85.3% reporting uncertainty, while around 70% in the service sector and 72.7% in construction share similar sentiments. Klaus Wohlrabe, head of ifo surveys, attributed the pervasive uncertainty to numerous geopolitical risks compounded by unclear political signals during what is described as an "autumn of reforms."
Historical comparison highlights the gravity of the situation, as pre-2020 uncertainty rates were markedly lower: 74.1% in industry, 46.2% in services, 67.5% in retail, and 32.6% in construction. There is cautious optimism that the expected finalization of a new infrastructure package could mitigate some of the uncertainty, particularly in construction.
Adding to the broader context, experts emphasize the accelerating complexity and unpredictability of the modern business environment. Freudenthaler-Mayrhofer, a commentator on innovation and change, stresses the importance of companies training in innovation processes and anticipating future scenarios to better navigate instability. She points out that today’s societal perception of stability may ironically reduce adaptability to change, and that innovation inherently involves long-term uncertainty. Despite advances in Big Data and predictive analytics, forecasting business conditions remains inherently unreliable.
Moreover, the rapid pace of technological adoption—exemplified by ChatGPT reaching 50 million users within two weeks, compared to 66 years for airplanes—illustrates how quickly market dynamics can shift, adding layers of complexity to strategic planning.
Overall, German companies find themselves in a highly volatile environment shaped by geopolitical tensions, uncertain policy directions, and rapid technological change, underscoring the need for strategic renewal and flexible innovation approaches to survive and thrive in the coming years.