Struggling with Red Tape and Energy Costs: Why SMEs Criticize Germany's Business Environment
Struggling Grades for Germany's Mid-Sized Businesses - Lowest Position Held by Germany Within the Community
German SMEs have their reservations about the business climate in Germany, placing it ninth among economic nations, even behind Italy and Vietnam, according to a Forsa survey commissioned by Commerzbank. Only 10% of the 1,525 businesses surveyed rated the conditions in Germany as "good" or "very good."
Most SMEs (71%) in the survey are disillusioned with the significance of the "Made in Germany" label. Many seek solace in a new federal government that could potentially offer some positive impetus.
- Red Tape
- Frustrating bureaucracy stems from complex regulations and high administrative costs, diverting valuable resources that should be invested in innovation and growth.
- High Energy Bills
- Expensive energy in Germany, fueled in part by energy transition efforts, inflates operational expenses. This puts SMEs at a disadvantage compared to businesses in countries with cheaper energy sources.
- Digital Divide
- SMEs in Germany continue to grapple with the digital transformation, hampered by limited resources and the high costs of IT infrastructure and digital skills training.
The trade dispute with the USA adds to the uncertainty, with more companies actively pursuing new sales markets and contemplating price increases to offset higher tariffs. Slumping business confidence and diminished investment in growth initiatives and innovation only exacerbate the challenges.
Alarmingly, possible EU counter-tariffs could hit SMEs even harder, potentially inducing higher purchase prices and affecting suppliers. While these counter-tariffs haven't been finalized, they could pose a significant threat to SMEs' competitiveness in the global market.
A balanced approach is required to help SMEs successfully navigate domestic and international challenges, including simplifying regulations, backing climate investments, fostering digital capabilities, and ensuring a stable trade policy landscape. Only then can these businesses regain their competitive edge.
EC countries could benefit from reviewing Germany's business environment, as SMEs criticize a multitude of issues such as red tape, high energy costs, and a digital divide. The industry, finance, and businesses within these countries might learn from Germany's challenges and implement more efficient policies to support SMEs, boost employment, and bolster growth.
Given the trade dispute with the USA, it's essential for EC countries to consider the effects of possible EU counter-tariffs on their SMEs, as these businesses could be disproportionately impacted by higher purchase prices and affected suppliers. The implementation of balanced policies that address simplifying regulations, backing climate investments, fostering digital capabilities, and ensuring a stable trade policy landscape is crucial to help SMEs remain competitive within a global market.
