Germany in May 2026: the most important developments in economy
In May 2026, Germany's economy was under strain from the war in Iran and the Hormuz crisis. Projections pointed to a tax shortfall of 52 billion euros, and industrialist Reinhold Würth warned of a deindustrialisation spiral. Inflation reached its highest level since January 2024, borrowing costs rose, and the European Commission halved Germany's growth forecast. Advisers to Chancellor Friedrich Merz also cut their forecast and expect faster inflation. The government cut the fuel tax on 1 May, while the SPD's Matthias Miersch said the fuel discount has no future. Fertiliser makers, airlines and logistics firms reported higher costs, and Uniper warned of a possible gas shortage in winter. Germany signed a major LNG deal with Canada's Ksi Lisims project and the utility SEFE.
The car industry faced US tariffs and restructuring. An expert put the cost of US auto tariffs at 15 billion euros for Germany, and officials said the EU would retaliate if the US raised them to 25%. Volkswagen became the largest shareholder in Rivian, its labour leaders reaffirmed a red line against plant closures, and its controlling family demanded restructuring. Commerzbank announced 3,000 job cuts while fending off a takeover bid from UniCredit, and Thyssenkrupp kept its steel division. Varta cut 350 jobs after losing an Apple battery contract.
Defence was the counterweight. Rheinmetall's first-quarter revenue fell short of expectations and it faced implementation problems in developing drone defence, while warship builder TKMS reported a record order backlog of $24 billion. Defence Minister Boris Pistorius travelled to Canada to seek a billion-dollar deal, and Volkswagen was reported to be considering arms production.
Corporate investment continued in technology and infrastructure. SAP acquired Prior Labs and invested in n8n, valuing it at $5.2 billion, and Tesla put $250 million into its German factory. Siemens bought Mermec's rail business from Vito Pertosa, announced a 6 billion euro share buyback, and parliament approved three new railway lines. Uber became the largest shareholder of Delivery Hero, and Deutsche Bank raised its dividend by 50 percent.
by WorldBrief & Maksim Micheliov | AI-generated summary
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