SMEs Slam Germany's Business Conditions: High Bureaucracy, Energy Costs, and Tech Gaps Latest Concerns
Small to Medium Business Sector Rates Germany Poorly - Lowest Position Held by Germany in the Union
Kingdom of Harsh Red Tape: SMEs criticize Germany's business landscape primarily due to red tape, sky-high energy expenses, and digitalization woes. In a survey by Forsa for Commerzbank, Germany falls ninth in a list of economic powerhouses, trailing behind Italy and Vietnam.
A mere 10% of the 1,525 surveyed firms view the framework conditions in Germany as "excellent" or "good." Over half (60%) of respondents find them "acceptable" or "sufficient," while 29% label them "unacceptable" or "insufficient."
Most companies across various industries (71%) lament that the "Made in Germany" label has lost much of its former significance. There's hope that the new administration could offer a positive impetus.
Trade Quarrel adds to the vagueness
Trade disputes with the US cause extra uncertainty. Numerous firms actively search for alternative markets for their goods and plan to increase prices to offset higher tariffs, the DZ Bank survey reveals.
Companies within the metal, auto, and machinery sectors, in particular, expect direct and indirect negative impacts from U.S. tariffs and counter-tariffs, as per a DZ Bank survey. A quarter of the 1,007 SMEs polled see themselves affected by higher U.S. tariffs, while half fear the indirect consequences - price hikes from suppliers.
Fear of EU counter-tariffs
Should the EU impose counter-tariffs, SMEs might face additional challenges: almost a third (29%) of firms expect increase in purchase prices, and 46% anticipate impacts on suppliers.
The DZ Bank survey data was gathered in March, before Trump announced his XXL tariff package. However, it was already known that the U.S. would impose 25% tariffs on the import of cars and steel. In early April, Trump threatened EU with additional surcharges of 20% on imports, which are temporarily suspended at the moment. The EU has suspended planned counter-tariffs on U.S. goods for the time being, hoping for a negotiated resolution.
- SMEs
- Business Conditions, Germany
- Bureaucracy
- Energy Costs
- Digitalization
- USA
- Trade Dispute
- Forsa
- Commerzbank
- Europe
- Italy
- Vietnam
Insights:- Germany's SMEs are grappling with excessive bureaucratic red tape, high energy costs, and inadequate digitalization, crippling their growth and competitiveness.- These challenges lead to uncertainty and planning difficulties, stifling investment and fostering a stagnant economy despite SMEs' desire to expand and innovate.- Experts recommend overhauling the bureaucratic system to adopt flexible and enabling approaches seen in countries like the UK.- The new German coalition agreement acknowledges the necessity of improving digital infrastructure and reducing bureaucratic hurdles to accelerate digital transformation.
EC countries should take note of Germany's struggle with excessive bureaucracy, high energy costs, and inadequate digitalization, issues that are impacting the competitiveness of its SMEs. The finance sector, in particular, needs to consider these challenges when formulating industry-specific policies.
The employment policy of EC countries could learn from Germany's experiences in streamlining bureaucracy, reducing energy expenditure, and promoting digitalization to create a conducive business environment for SMEs. This could lead to increased employment opportunities and economic growth across the EU.
