According to research conducted by the DZ Bank and the Federal Association of German Volksbanken and Raiffeisenbanken (BVR), the willingness of small and medium-sized German enterprises (SMEs) to invest is at its lowest level in more than three decades. As reported by “Handelsblatt”, only 52 percent of companies intend to make internal investments over the next six months. Data gathered since 1995, through surveys of over 1,000 businesses every autumn and spring, shows that the current level of investment readiness is unprecedentedly low. In fact, SME investment willingness is currently less pronounced than during the financial and economic crisis of 2008/2009, the COVID-19 pandemic in 2020, or the energy crisis following the start of the war in Ukraine in 2022.
SMEs attribute this hesitation primarily to weak demand, increasing operational costs, and high geopolitical uncertainties. Energy costs are cited as a major issue, with two-thirds of businesses lamenting excessively high prices-a figure that rose from slightly over half in the autumn period. Furthermore, approximately one-third of company executives are now concerned about supply chain shortages, and worry stemming from the Iranian conflict has also recently resurfaced, something that was negligible just last autumn.
Stefan Beismann, Executive at DZ Bank, stated that this historically low investment readiness reveals “how deep the uncertainty within the SME sector has reached.” Businesses are currently concentrating their investments mainly on securing and further developing their existing operations, while investments aimed at expanding capacity or pursuing new growth projects are being postponed. The consequence of this trend is a decline in the competitiveness of the German location.
