Survey: Persistent economic weakness is dampening the mood among medium-sized businesses

Economic weakness, a lull in orders, a shortage of skilled workers – concerns are growing among Germany’s medium-sized companies. In the latest survey by the Federal Association of German Volksbanks and Raiffeisenbanks (BVR) and DZ Bank, many companies assess their current business situation as worse than in the spring.

The expectations of more than 1,000 companies for the next six months have also deteriorated in almost all sectors; according to the analysis, pessimism now predominates again: more than a quarter (27 percent) of those surveyed between September 11 and October 10, 2024 The owner and managing director now expects the business situation to deteriorate. Only one in five companies (20 percent) expects an improvement. In the spring survey the relationship was reversed.

Reluctance to invest

Because production capacities are not being utilized to capacity, many companies are holding back on investments – and have been doing so for two years now. In addition, according to the survey, more medium-sized companies want to reduce staff in the next six months than increase them. This can be observed particularly in medium-sized companies in eastern Germany and in large medium-sized companies with more than 200 employees.

Bureaucracy as the biggest burden

In addition to the ongoing crises of recent years, medium-sized businesses have long been complaining about too much bureaucracy and a lack of skilled workers. In the survey, 82 percent of those surveyed cited the burden of too much bureaucracy as by far the biggest problem area.

“Bureaucracy and a shortage of skilled workers remain the biggest problems facing small and medium-sized businesses. Politicians are called upon to create all-in-one solutions as quickly as possible after the federal election so that the economy can get back on its feet,” warned BVR President Marija Kolak.

In their analysis, the cooperative banks point out that the shortage of skilled workers will become increasingly severe over the next ten years because more and more baby boomers – the so-called baby boomers – will reach retirement age in the coming years.

The companies surveyed see the possibility of employing their employees beyond retirement age as the most important means of combating demographic change: almost three quarters (72 percent) want to make this possible for their employees.

Capital buffers give hope

Despite all the problems, the authors of the current edition of the semi-annual medium-sized business study, which is supplemented by an evaluation of the annual balance sheets of medium-sized corporate customers, also see signs of hope: “The resilience shown in past crises as well as the greatly improved equity capital of medium-sized companies since the turn of the millennium will be appreciated by the vast majority of them Helping medium-sized businesses (…) through this difficult time.”