Small and Medium-Sized Enterprises (SMEs) continue to serve as the bedrock of the German economy.
Despite a challenging economic climate marked by recession, high energy costs, and a scarcity of qualified workers, a study reveals that German Mittelstand continues to be the backbone of the German economy. As per a report published on Tuesday by the German Savings and Giro Association (DSGV), these businesses maintain a robust average equity ratio of 37%. DSGV President Ulrich Reuter expressed optimism, stating, "The Mittelstand's financial stability remains intact."
However, escalating personnel expenses and elevated energy and material costs are putting considerable strain on these companies. Most notably, labor costs have surged by approximately 7%. Warned Reuter, "The bedrock of our prosperity is under imminent threat."
To safeguard the Mittelstand's innovativeness and competitiveness, Reuter advocated for proactive bureaucratic reduction and the extension of digital and conventional infrastructure. "Bureaucratic constraints must be alleviated to provide businesses with more leeway," he urged. Simultaneously, swift and efficient digital administration, coupled with potent broadband networks, are requisite. This would facilitate more agile and resource-efficient operations across businesses.
Reuter emphasized that Germany's economic ascendancy can only be sustained by augmenting investments. Privately-funded capital plays a pivotal role in this endeavor. "It's virtually impossible to finance investments at the requisite scale solely through public funds," he conceded. It's crucial to devise mechanisms for utilizing private capital to bolster infrastructure. For Europe, and specifically Germany, to close the gap with the world's dominant economies – the United States and China – economic development should be the top priority in political agendas.
The study highlights that small and medium-sized enterprises, often referred to as the Mittelstand, are crucial for the stability of the German economy, even in challenging economic times. Despite facing escalating personnel expenses and increased energy and material costs, these businesses manage to maintain a robust average equity ratio of 37%.
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