More than a quarter of German companies plan to cut jobs next year, the Cologne Institute for Economic Research (IW) said in its autumn survey on Monday.

Its poll among 2,300 domestic firms added that only 20 percent of the respondents intended to create new jobs in 2013. "In the face of sagging exports and the resulting drop in industrial output companies across the country are becoming more cautious," said the institute.

IW Director Michael Hüther emphasized that the general business climate had been getting worse by the month and called on the government to do its homework and support employment initiatives.

Restricted capital flow

"Policy makers should refrain from tax hikes, invest in infrastructure projects and present a convincing energy program as the country moves towards a much greater use of renewables," Hüther said in a statement.

The IW's autumn survey saw only 24 percent of companies expecting increased production levels in 2013, while the majority forecast the German economy to stagnate for much of next year.

"We reckon with even lower growth rates next year, given the simmering sovereign debt crisis and global economic uncertainties," said Hüther. "But I don't expect us to slide into a recession, although the manufacturing sector may come pretty close to it."

Because of the magnitude of financial uncertainties, German companies showed reluctance to carry out major investments in 2013. Almost 28 percent intended to spend less, compared to this year's level, the study said.

hg/sej (Reuters, dapd, dpa)