I don’t know German but I know some related languages. Ig was seemingly “-ic” in Ancient English, in the old days actually being “-like, alike” (from “likur, -ligur”):
demonlike --> demonlik —>
= demonic (modern English)
= demonlig (modern Nordics & German; Old English).
We only have a few of these left in modern English and at least some of them aren’t of English/ancient Germanic origin, ex. “angelic, heroic, horrific, terrific, pathetic”. In English this -lig eventually further evolved into -ly and then -y in a few words, and completely fell off or was replaced by Latin/French in others:
brother-like --> brother-lik, brotherlig —> brotherly.
manlike —> manlig —> manly.
swarthlike --> swarthy (swarth, “svart”, being our original word for black)
water-like —> waterly —> watery —> aquatic (replaced by French/Latin)
time-like --> timey —> temporal (replaced by Latin)
Note that the i “ee” and y are actually the same sounds, y is just shorter than ee. Likewise K and G are the same except for that the vocal chords are used on G and not on K. That’s why they so easily turn into each other, historically, across all languages, and why -lik became ly / lig. Naturally, “ch” is made very close/similarly in the mouth compared to K.
The isch, if it doesn’t come from “ig” in some way, was possibly -skr, and was probably the plain adjective ending (I don’t know as much about the origin of this one) which became -sh or fell off in English:
Enskr, (Engil-ligr/Engil-likr) Engill (Old Norse) -->
Enskur, (Eingilskur), Eingil (Faroese)
English (Angelic), Angel (English)
Engelsk (Änglalik), Ängel (Swedish)
Englisch (Engelhaft?), Engel (German)
In Faroese/Icelandic there are two different words for “English”, one for “Englishman” (eingil) and one for “English language” (ensk); in most of the other Germanics only this “engil” (the one that originally meant “angel”) seems to be left.
Note that even today, “rs”, “k(vowel)” and so on in most of the Germanic-Nordic languages turns into either a sh or ch sound. So the German side of things makes sense to me from what little I know anyway.
On the same pattern as “English” we have Spanish (spansk), French (fransk, franc as in francophone) and so forth; the sh apparently becoming ch in English in some cases… However if we’re talking about, say, “American, Canadian, African, European”, that -an is an ending from French or something as far as I know, so if German, Swedish etc borrowed it or replaced it with the more original -sk ending (amerikansk, kanadensisk, afrikansk, europeisk) is just according to when in time the word was borrowed.
In English we also have “China, Chinese; Faroe, Faroese”, that -ese was actually taken from French/Latin, while Swedish has “Kina, kinesisk (färöisk)” with the same old -sk ending. In some words we even have both: Indonesian (ese-ian) = indonesisk (-sk).