According to the Consumer Confidence Survey published by the Munich Ifo Institute in April, a significant chunk of German companies are facing threats to their continued existence. Specifically, 8.1 percent of businesses surveyed reported that their current operational viability is endangered. Klaus Wohlrabe, who leads the Ifo surveys, described the economic climate as remaining severely strained, predicting that high insolvency rates are likely to persist in the coming months due to geopolitical uncertainty.
The retail sector highlights particular difficulties, with 17.4 percent of companies finding themselves existentially threatened-marking a new record high. Consumer reluctance to spend is identified as the primary concern, which is compounded by the growth of online commerce and increased competition from inexpensive foreign providers. Overall, 1.6 percent of all commercial businesses, spanning wholesale and retail, reported fearing they might have to close down.
Three issues affect businesses across all industries: weak demand and a lack of new orders, rising operational and energy costs, and increasingly cumbersome bureaucracy. Many establishments are also grappling with severe liquidity shortages, as their customer base begins to cut back spending or faces insolvency itself. Wohlrabe noted that the economic crisis is propagating throughout the supply chains; when customers drop off or cancel orders, the consequences hit suppliers and service providers with full force.
Among service providers, 7.6 percent of companies feel threatened. The hospitality and restaurant industry is particularly vulnerable, with nearly 20 percent of companies in this sector reporting existential threat. Furthermore, the proportion of businesses struggling in advertising and market research is notably high, standing at 14.3 percent.
In the industrial sector, the perceived threat has slightly declined to 7.5 percent. However, the pressure remains considerable, particularly for companies reliant on exports, which are weighed down by high raw material and energy costs, alongside disadvantages in international competition compared to Asian providers.
The construction industry saw the threat level rise slightly to 7.3 percent. The slowdown in residential construction continues, fueled by lengthy planning and approval processes and decreased financing from banks.
