The Cologne Institute for Economic Research (IW) said in its bi-annual business survey that the weakening euro zone economy and the ongoing conflict with Russia over Ukraine were having an increasingly negative impact on German companies.

From the nearly 3,000 firms polled this autumn, 31 percent expected production to rise in 2015 compared to 53 percent in spring, while only 24 percent anticipated exports to increase compared to 34 percent half a year ago, the institute said.

Economic uncertainty is weighing on investments plans, with only 30 percent of firms polled intending to spend more and 23 percent likely to invest less, the survey showed.

On the employment side, 24 percent expect to hire more people compared to 38 percent in the spring survey, it added.

IW said policies adopted by conservative Chancellor Angela Merkel's coalition with the Social Democrats, such as lowering the retirement age and introducing a legal minimum wage, had been "at the expense of companies".

German business sentiment has fallen for six months running, according to the Munich-based Ifo institute, hitting its lowest level in almost two years, and hard data has painted a similarly bleak picture.

A slew of organisations including the OECD, the IMF and leading institutes have slashed their forecasts for German economic growth and the government now expects the economy to expand by just 1.2 percent this year and 1.3 in 2015.

(Reporting by Michael Nienaber; Editing by Stephen Brown and Toby Chopra)