Struggling Business Climate: Sentiment Among Independent Workers Noticeably Declines - Deteriorating sentiment amongst self-employed: a noticeable worsening of the overall mood.
Hey there! Here's the lowdown on the current business world, particularly for freelancers and small businesses.
- The Current Scenario: It's not all sunshine and roses out there, according to Ifo expert Katrin Demmelhuber. A whopping 48.4% of freelancers are grappling with a dearth of orders, making it tough for them to predict their business future.
- The Prickly Uncertainty: The index for the present business situation has plummeted to a grim -19.4 points from -12.7 points in March. And things are looking even bleaker for the future, with expectations hitting a gloomy -28.1 points in April compared to -18.9 points in the previous month.
- The Affected Sectors: The processing industry is hit hardest by these developments, with US trade policy apparently playing a significant role in the risks it faces. However, it's not just the processing industry feeling the heat—the retail sector and service sector are also affected, showing a downward trend.
- The Fading Optimism: After the federal election and the financial package, many freelancers were hopeful. But that optimism has vanished quickly, especially when large companies started cutting their budgets, which hasn't helped the smaller firms.
- The New Collaboration: Since August 2021, the Ifo and Jimdo have been calculating the business climate index for solo self-employed individuals and small businesses with fewer than nine employees. The study covers a wide range of sectors, with a focus on the service sector, and surveys around 1,660 businesses monthly.
- The Enriching Details: It's also worth noting that manufacturing orders have seen a 3.6% increase in March 2025 compared to the previous month, according to the German Federal Statistical Office [source]. While this doesn't directly reflect the service sector, it does suggest a general improvement in manufacturing orders.
Small and medium-sized enterprises (SMEs) in Germany are investing heavily in digitalization, which, though challenging, could indirectly benefit service sector businesses by improving efficiency and market position [source]. However, the influence of the trade dispute with the USA on German businesses remains mostly uncertain.
Lastly, starting in 2025, VAT limits for small businesses in Germany will change, which might simplify tax procedures and reduce administrative costs, indirectly helping service sector businesses [source]. Keep these factors in mind as you navigate the evolving business landscape!
- Order situation
- Small businesses
- Ifo Institute for Economic Research
- USA
- Digitalization
- Trade Disputes
- VAT Changes
- The struggling order situation in the current business climate is affecting a significant number of freelancers and small businesses, as revealed by Katrin Demmelhuber from the Ifo Institute for Economic Research.
- The index for the present business situation indicates a sharp decline, with 48.4% of freelancers struggling with a lack of orders, posing risks to their future business prospects.
- Despite the historical decline in the index, it's encouraging to see a 3.6% increase in manufacturing orders in March 2025, as reported by the German Federal Statistical Office.
- To counteract the challenges faced by freelancers and small businesses, small and medium-sized enterprises (SMEs) are investing in digitalization, which could potentially improve their efficiency and market position in the long run.
