Sluggish order situation and high interest rates weigh on SMEs
In view of the weak economy and structural problems, concerns are growing among SMEs in Germany. Both the business situation and the expectations of the more than 1,000 companies surveyed have "deteriorated significantly" compared to the spring survey, according to the Federal Association of German Cooperative Banks (BVR) and DZ Bank on the basis of their latest joint SME survey.
In the spring, hope for an economic recovery still prevailed in all sectors included in the semi-annual survey and in companies of almost all sizes. Now, the situation has noticeably worsened in two areas in particular, in addition to the perennial problems of skills shortages and bureaucracy.
According to the latest analysis, almost half (46%) of SMEs are now worried about the order situation, compared to 29% in the spring. The chemical and plastics industries, which are already suffering greatly from the rise in energy costs, are the most affected.
In addition, a quarter (26%) of the owners and managing directors surveyed in the period from September 18 to October 16, 2023 are concerned that financing has become more expensive due to the rapid rise in interest rates. That is more than ever before in this survey. In the construction sector, this figure is even higher at 35%. "The construction industry and medium-sized agricultural businesses are currently suffering the most from the increased financing conditions as a result of the interest rate turnaround," the report states.
"Companies are very adaptable"
"The federal government's efforts to strengthen the business location must quickly produce tangible results," warned BVR President Marija Kolak. Faster planning and approval procedures, less bureaucracy and financial incentives for more investment would be a priority.
DZ Bank Board Member for Corporate Clients Uwe Berghaus was optimistic that SMEs would also be able to cope well with the new challenges, despite the ongoing crises of recent years. "Companies are very adaptable."
The current edition of the semi-annual SME study, which is supplemented by an evaluation of the annual balance sheets of SMEs, states: "The results of this study give (...) hope that the vast majority of SMEs will also be able to successfully complete the coming months and years. They certainly appear to be well equipped to do so."
Despite the concerns among the middle class and SMEs due to the sluggish order situation and high interest rates, there's optimism that companies will adapt and navigate through these challenges. The economic situation has led to a noticeable deterioration in the business outlook for many SMEs, with 46% now worried about the order situation and 26% concerned about increased financing costs.
Source: www.dpa.com
