Plan by the Commission for a mandate on standardizing food labeling laws across Member States
German SMEs Coasting on Pessimism in Spring 2023
The vibe among German small and medium-sized businesses (SMEs) is far from rosy in the current spring season, as credit agency Creditreform recently reported, following a survey of around 1,200 companies. For the third consecutive time, their outlook on business conditions remains gloomy.
"Five years after the onset of the pandemic and numerous crises later, many companies in Germany are almost teetering on the brink," Creditreform's chief economist Patrik-Ludwig Hantzsch stated.
No hint of the anticipated economic rebound appears on the horizon. On the contrary, SMEs continue to maintain a jaded perspective towards the economic future, as the current outlook doesn't seem to promise sustainable improvement. Weak industrial production, ongoing turmoil in the construction sector, growing geopolitical uncertainties, and trade conflicts are all contributing to this pessimistic view.
The persistent low level of investment reveals an astounding lack of confidence in the future economic prospects of the region. Only 41.7 percent of the surveyed firms are currently investing – a figure last recorded during the 2009 financial crisis. Moreover, the heftyshell out for energy prices and concerns about structural weaknesses in the location undermine investment appetite. The sector is also wary of hiring new staff.
By early 2025, 31 percent of the companies had reported a sales decline, while only around 20 percent had seen an increase, it was further documented. "The German SME sector has stagnated for over two years – the warning signal is clear as a bell," Hantzsch reiterated. "Action is needed to prevent our competitiveness from taking another hit."
Policy measures such as a comprehensive corporate tax reform and stronger investment incentives offered by the new federal government could help revive the sector. However, it's crucial to understand that the factors dampening the spirits of SMEs in spring 2023 are likely rooted in a complex interplay of global economic uncertainty, supply chain disruptions, high energy prices, rampant inflation, and regulatory challenges.
- The proportion of German SMEs investing in spring 2023 is relatively low, similar to levels seen during the 2009 financial crisis, according to Creditreform's survey.
- Patrik-Ludwig Hantzsch, Creditreform's chief economist, states that many SMEs in Germany are in a precarious situation, having faced numerous crises including the pandemic, and are almost teetering on the brink.
- The pessimistic view among SMEs about the economic future is influenced by factors such as weak industrial production, ongoing turmoil in the construction sector, growing geopolitical uncertainties, and trade conflicts.
- Policy measures like a comprehensive corporate tax reform and stronger investment incentives could potentially help the SME sector, but the factors contributing to the sector's pessimism in spring 2023 are likely rooted in a complex interplay of global economic uncertainty, supply chain disruptions, high energy prices, rampant inflation, and regulatory challenges.
