Small and medium-sized businesses feel the effects of economic slowdown

The clouding over of the German economy has now also reached SMEs. This is shown by the results of the new SME study by DZ Bank and BVR. Business expectations have plummeted compared with the spring: The balance of expectations fell from 24.1 points in spring to only 0.4 points. This means that the optimistic and pessimistic business prospects of the medium-sized companies surveyed are now almost in balance. The assessment of the business situation did not decline so significantly. However, it fell for the third time in a row. SMEs in export-oriented industrial sectors in particular assessed their business situation significantly weaker than six months ago.
The main reason for the current deterioration in sentiment is the consequences of the global economic slowdown. These also ensured that SMEs reduced their foreign commitments for the third time in succession. Nevertheless, more than half of them are still active abroad, which is why they cannot escape the effects of international risks such as trade disputes and Brexit.

However, the shortage of skilled workers and bureaucracy continue to be the biggest current problem areas for German SMEs. In the long term, the change in the age structure will even exacerbate the shortage of skilled workers, as half of those surveyed will retire a large proportion of their workforce in the next ten years. However, SMEs are already beginning to take precautions. One way of doing this is through training. Here, however, the number of applications from small and medium-sized companies is falling.

Despite the challenges, small and medium-sized enterprises in Germany are still proving resilient at the end of 2019. The equity ratio rose from 7.5 percent in 2001 to 27.8 percent last year. Despite all the adversities, SMEs remain robust overall, even if individual segments such as the metalworking, automotive and mechanical engineering industries in particular are noticeably affected by the economic slowdown. Nevertheless, SMEs were and still are an important pillar of the German economy and will remain so in the coming years.

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