Small Businesses Slam Germany's Infrastructure: Too Much Red Tape, High Energy Costs, and Skimpy Digitalization
Small and Medium Enterprises (SMEs) rate Germany unfavorably - Least Populous Nation in the Union
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The dead weight of bureaucracy, towering energy expenses, and digitalization gaps are sending shockwaves through Germany's small businesses. These enterprises have lost faith in the region, with a lousy rating for Germany ranking it ninth among economic countries - even behind Italy and Vietnam.
Only ten percent of the 1,525 businesses polled between November 2021 and February 2022 deemed Germany's conditions as great or decent. An overwhelming sixty percent evaluate them as satisfactory or passable, while 29 percent criticize them as unacceptable or insufficient.
Over 70 percent of those surveyed across all industries believe the "Made in Germany" seal has noticeably diminished in value. The economy bursts with hope that a new federal government will spark change.
, , , , Trade Wars Heat Up , , , , , , ,*
The trade conflict with the U.S. is adding to the chaotic environment. Numerous companies are apparently working diligently to discover new sales markets for their products and are planning on increasing prices to account for higher tariffs.
Of the surveyed companies by DZ Bank, metal, automotive, and machinery sectors anticipate significant negative impacts from U.S. tariffs and counter-tariffs on their business. One-fourth (25%) of the 1,007 SMEs foresee a direct effect, and 50 percent fear indirect consequences, like cost increases from suppliers or higher prices from foreign competitors.
EU Counter-Tariffs Pose Greater Threat , , , ,*
If the European Union introduces counter-tariffs, nearly a third (29%) of companies predict increased purchase prices, and 46 percent fear repercussions on suppliers.
The data collected for the DZ Bank survey took place in March, before U.S. President Donald Trump revealed his XXL tariff package. However, it was already recognized that the U.S. would impose tariffs on various imports, like cars and steel. In early April, Trump threatened the EU with additional tariffs of generally 20 percent on imports into the U.S. These tariffs are currently suspended. The EU has halted planned counter-tariffs on U.S. goods for the time being and is hoping for a peacefully negotiated solution.
, , , , , SMEs , , , , , ,*
Lack of Infrastructure , , , ,*
German SMEs require improvements in digital infrastructure, such as internet connectivity and digital skills, to compete with international competitors. However, many SMEs struggle to keep up with necessary technological advancements due to archaic infrastructure and a lack of training resources.
Obstacles of Regulatory Complexity , , , ,*
Small businesses suffer from staggering bureaucracy and regulatory burden. To overcome these hurdles, nearly half of all SMEs believe bureaucratic hurdles must be reduced. The demand for fewer regulations and a reduction of bureaucratic burden is echoed by 98 percent of entrepreneurs, who long for operational freedom.
Frustration Over Energy Prices , , , ,*
Energy costs are hefty for many SMEs, posing a severe challenge to their future growth. Reducing overall expenses and increasing access to energy are crucial for SME competitiveness, particularly in sectors that are power-intensive or faced with volatile markets.
Substandard Construction Sites , , , ,*
Although not explicitly stated in the survey data, the demand for infrastructure improvements by nearly 95% of SMEs insinuates concerns about construction sites and efficiency. Construction delays or insufficient support can hinder business expansion and stifle small businesses' growth potential.
Credit and Financial Constraints , ,*
Credit restrictions remain high for SMEs, inhibiting their ability to invest in growth, innovation, and resilience for digitalization or energy transition. These constraints can further impede SMEs from navigating the complex challenges of the contemporary market.
Trade Disputes with the U.S. , , , ,*
The trade tensions and the potential of additional U.S. tariffs are taking a toll on German SMEs, particularly their internationalization efforts. Due to limited resources, smaller enterprises find it more difficult to manage the associated risks and costs, or to rapidly adapt to alternative foreign markets. This instability discourages SMEs' willingness and ability to expand their exportation efforts or establish themselves abroad, further complicating an already tumultuous global market[1][3][5].
- Despite being in EC countries, small businesses in Germany have given Germany a lousy grade in employment policy, ranking it ninth among economic countries, with only 10% deeming the conditions great or decent.
- Commerzbank's survey found that 60% of small businesses view Germany's employment policy as satisfactory or passable, while 29% believe it's unacceptable or insufficient.
- The survey also revealed that over 70% of small businesses believe the "Made in Germany" seal has diminished in value due to the country's employment policy.
- Amid the trade conflict with the U.S., small businesses are looking to increase prices to account for higher tariffs, which could have a ripple effect on employment policy.
- The demand for fewer regulations and a reduction of bureaucratic burden in the employment policy is echoed by 98% of entrepreneurs, who long for operational freedom.
