BERLIN (Reuters) – Sentiment among small and mid-sized businesses in Germany, hard-hit by massive cost increases, weak demand and high interest rates, is back near pandemic lows, a survey showed on Thursday.
A study by credit agency Creditreform showed morale among the “Mittelstand” companies that form the backbone of the German economy has slipped back into negative territory for the first time since 2020, signalling a contraction in economic output.
The index fell to -1.2 points in 2023, according to Creditreform, which surveyed some 1,200 firms. The only other time sentiment was lower in the last 10 years was 2020, at -5.7.
Due to the sharp rise in financing costs and the gloomy economic situation, the willingness of these businesses to invest has also slumped, according to Creditreform.
The share of companies planning investments has dropped to 38.4% from 46.2% last year, the lowest level in almost 20 years, it said.
“Even if the German economy is no longer shrinking next year, as predicted, the impact of the crisis is still considerable and will have consequences in coming months, said Patrik-Ludwig Hantzsch, head of Creditreform Economic Research.
“We are therefore also assuming insolvency figures will rise,” he added.
(Reporting by Klaus Lauer and Miranda Murray, Editing by Rachel More)
