Struggling to Succeed: SMEs Voice Concerns on the German Business Landscape
Struggling Grades for Small and Medium-Sized Businesses in Germany - Least populated nation within the European Union Community
Germany's SMEs are grappling with a multitude of issues, including excessive bureaucracy, high energy costs, and digitalization shortcomings, causing them to rank Germany below Italy and Vietnam in a survey by Forsa for Commerzbank.
Just 10% of the 1,525 companies surveyed rated the business environment in Germany as "excellent" or "good." While about 60% believed it to be "acceptable" or "adequate," almost a third (29%) deemed it "insufficient" or "poor."
Moreover, a large majority of 71% of surveyed businesses across all industries have expressed concerns that the "Made in Germany" seal of quality has significantly lost its lustre. There is considerable hope among the economic sector for a new federal government to provide positive impulses.
Adding to the uncertainty, the trade dispute with the United States is painting a dismal picture for numerous companies, who are actively searching for new markets and planning to raise prices to counteract higher tariffs.
According to a DZ Bank survey, industries such as metal, automotive, and machinery could see the most significant negative impacts from US tariffs and counter-tariffs. Over 15% of the 1,007 SMEs surveyed reported direct exposure to higher US tariffs, while 50% were concerned about indirect effects, like supplier price increases.
Potential EU counter-tariffs could potentially affect SMEs even more. If enacted, nearly a third (29%) of companies expect higher purchase costs, while 46% fear repercussions from their suppliers.
Data for the DZ Bank survey was collected in March, before US President Donald Trump presented his massive tariff package. However, it was already known that the US would impose 25% tariffs on the import of cars and steel. In early April, Trump threatened the EU with additional 20% surcharges on imports, which are currently deferred. The EU has temporarily halted planned counter-tariffs on US goods and is hoping for a negotiated solution.
- SMEs
- Location Germany
- Construction sites
- USA
- Digitalization
- Federal government
- Energy costs
- Bureaucracy
- Frankfurt am Main
- Trade dispute
- Forsa
- Commerzbank
- Europe
- Italy
- Vietnam
Where Changing Landscapes Meet Persistent ChallengesGerman SMEs are facing challenges at home and abroad. To mitigate red tape and advance digitalization, the coalition agreement of the newly formed government aims to streamline administrative procedures and improve digital infrastructure. Progress, however, may take time, and businesses must adapt accordingly.
SMEs are also affected by tight credit conditions and escalating energy expenses. The government's efforts to support businesses and resilience initiatives could indirectly cushion SMEs against these costs, although specific measures remain to be announced.
Furthermore, US trade policies and potential EU counter-tariffs pose significant threats to SMEs. German companies, particularly those operating in the US, fear negative impacts from increased protectionist policies, causing investment hesitation and cautious decision-making. Given these constraints, SMEs are carefully evaluating their choices, reconsidering growth and investment strategies in affected markets.
In this complex and dynamic environment, German SMEs are modeling resilience by adapting to internal reforms while being cautious, scrutinizing market opportunities, and relying on evolving government support and digitalization strategies.
- SMEs in Germany are concerned about the inadequacy of the current business environment, with many expressing dissatisfaction and fearing its poor impact on their operations.
- The struggling 'Made in Germany' brand is another pressing issue for SMEs, with a large majority expressing concern over its decline in appeal.
- The ongoing trade dispute between Germany and the USA is casting a shadow over numerous companies, leading them to search for new markets and consider raising prices to offset higher tariffs.
- It is anticipated that potential EU counter-tariffs could greatly affect SMEs, with nearly a third expecting higher purchase costs and over half fearing repercussions from their suppliers.
