Almost one in two German medium-sized businesses are considering closure or moving abroad, citing too much red tape and higher taxes.
The damning indictment of Germany’s business climate was revealed in a survey conducted by the Federal Association of Medium-Sized Businesses (BVMW).
According to the poll, 26 percent of all medium-sized company directors across Europe’s powerhouse have considered shutting down their business, while 22 percent have expressed interest in moving their operations abroad.
Directors cited a constant stream of new regulations hindering their ability to operate in Germany and a hefty tax burden, as the two main reasons for their dissatisfaction.
A third of directors believe that Germany has become too bureaucratic to do business in. Meanwhile, more than a quarter reported higher taxes and customs duties as their biggest obstacle, while others cited a shortage of skilled workers as a hindrance to their operations.
“The results of our survey are more than just a warning signal,” said Markus Jerger, BVMW’s executive chairman.
Small and medium-sized enterprises (SMEs) comprise the backbone of the German economy, employing more than 40 million of Germany’s 45 million-strong workforce.
And many believe they are being taken advantage of with high taxes, or left behind and deprioritized by the federal government. One particular area of concern for SMEs related to the digitization of industry, which the BVMW believes is creating a chasm between the multinationals financially capable of adapting their operations in the digital age and those who can ill-afford to do so.
“In order for our economy to remain competitive in the future, we need a boost in digitization!” Jerger said recently.
the performance of the state and public administration is lagging behind. And the dependency on the huge technology giants is increasingly limiting the opportunities for medium-sized companies,” he added.
It isn’t just German companies whose confidence in the country as a place to do business is waning. The number of foreign investments in Germany has fallen for the last five years, with last year seeing the lowest level since 2013.
According to the Ifo Business Climate Index, confidence in the German economy has plummeted in recent times, and the country ranked fourth from the bottom in terms of competitiveness in a study comprising 21 industrial nations back in January.
“If nothing is done, the burden of bureaucracy will kill family businesses,” warned Rainer Kirchdörfer, chair of the Foundation for Family Businesses, at the time.