Leading German institutes on Thursday downgraded their 2026 growth forecasts, in another bad sign for Chancellor Friedrich Merz whose efforts to reboot Europe's biggest economy face mounting criticism.

The Ifo institute cut its forecast by a hefty half point to 0.8 percent growth while the Kiel Institute for the World Economy and the RWI Leibniz Institute also trimmed their predictions, with both expecting expansion of one percent.

After two years of recession, Merz has vowed vast outlays on defence and infrastructure and a barrage of reforms to get the country's export-driven economy moving again.

But critics say his efforts so far have not been radical enough as challenges mount for the economy, from a deepening industrial slump to US tariffs.

The government's spending plans "will gi

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