Small-to-medium sized enterprises in Germany are showing hesitancy when investing, a new study by Landesbank Baden-Württemberg (LBBW) has found.
The LBBW Mittelstandsradar 2025 found that 25% of German SMEs currently rate their business situation as ‘poor’, with just over a fifth (22%) saying that they plan to increase their investment budgets, amidst growing challenges.
When surveyed, SMEs said that they were particularly critical of the current bureaucratic environment in Germany (94%), as well as energy prices (91%) and regulations (89%).
“Our customers are sending a clear signal: They want to invest and continue to grow,” said Joachim Erdle, LBBW board member responsible for corporate customer business. “However, the uncertainty surrounding the framework conditions and the resulting lack of planning security, as well as rampant bureaucracy, are hindering implementation.”
Digitalisation and IT
At the same time, however, a number of investment opportunities have materialised, with digitalisation, IT innovation and automation seen as key future topics.
“77% of companies attribute a high or very high influence to the megatrend of digitalisation and automation on their willingness to invest, particularly to increase efficiency and remain competitive,” SME analyst Andreas da Graça added.
The survey was conducted between 10 and 21 March 2025, and included responses from 225 SMEs within LBBW’s customer base. While the sample is not representative of all German SMEs, it provides a focused snapshot of sentiment among companies, with a focus on the Baden-Württemberg region. Read more here.
