DSGV President Schleweis: Germany is better than its reputation

Germany still has sound prospects of overcoming the current period of economic weakness. To this end, however, robust changes must be quickly implemented. Germany still has the economic substance for a bright future, but it also has some weaknesses which need to be urgently addressed, said DSGV President Helmut Schleweis today in Berlin, where he presented the S-Mittelstands-Fitnessindex (Savings Banks Fitness Index for SMEs). Anonymised balance sheets for the year 2022 from more than 300,000 business clients of the Savings Banks Finance Group were analysed for this publication. The enterprises make up a representative cross-section of Germany’s economy.

The results show that despite the current challenges posed by persistently high inflation and energy prices and a shortage of labour, Germany’s economy was stronger than often suggested. This, said Schleweis, was due, not least, to small and medium-sized enterprises. “If the impression has been created in the recent past that nothing is working in Germany any more, my reply is: Germany’s small and medium-sized businesses are doing a great job. They constitute our country’s strong economic foundation.” However, not even this foundation can take excessive strain, Schleweis warned.

He emphasised that, despite the challenging macroeconomic environment in 2022, SMEs had achieved impressive results. “In 2022, the vast majority of small and medium-sized enterprises reported significant increases in turnover and profits. On average, their turnover was up by 14 percent and their profits by as much as 17 percent.” However, this positive average performance did not alter the fact that some sectors are having major problems – in particular the construction sector, the catering trade and retailers.

Schleweis called on policymakers to step up the pace in the fields of energy, digitalisation and an improved labour supply boosted by education and immigration, enabling SMEs to remain a strong foundation for the German economy. 

Energy was the most urgent factor. It played a key role in Germany’s competitiveness. “For a limited period of time, we will need to make pragmatic use of all available sources of energy and accelerate the transition to renewables. Instead of establishing new subsidies like an electricity price for industrial clients, it would be much faster and more effective to cut the electricity tax and reform grid fees. This would benefit not only a few large-scale companies but also small and medium-sized businesses,” argued Schleweis. Otherwise, there was an acute risk that enterprises might move to countries with lower energy costs.

He added that Germany had the strength to reverse the current economic trend and to turn it in a positive direction. Sufficient capital was available to SMEs to finance the transformation. Their average equity ratio amounted to approx. 38 percent. Liquid funds were currently not a bottleneck. “At the end of June 2023, the liquid funds available to enterprises in their own accounts amounted to a formidable EUR 187 billion, including EUR 146 billion in sight deposits. Along with the continued high equity base of Germany’s SMEs, this constitutes another important safety buffer in times of economic turmoil.”

Schleweis pointed out that Savings Banks and Landesbanken were prepared to support investments: “The Savings Banks, Landesbanken and Deutsche Leasing are ready and have the capacity to provide extensive support for investments, in particular to support transformation.”