Some 8.1% of businesses in Germany believe their economic survival is under threat, according to the latest ifo Business Climate Survey from the ifo Institute.
In retail, the situation is particularly critical, the data showed, with 17.4% of firms – a new high – believing their economic survival to be threatened, while across retail and wholesale combined, this stands at 11.6%.
“The economic situation remains tense,” commented Klaus Wohlrabe, head of surveys at ifo. “Given the geopolitical uncertainty, insolvency figures are likely to remain at a high level in the coming months.”
Core concerns
Across the economy as a whole, companies highlighted three common problems: weak demand and falling orders, rising energy and operational costs, and increasing bureaucracy. Many firms also reported worsening liquidity pressures as customers cut spending or became insolvent themselves.
Within retail, the report identifies weak consumer spending as the main challenge facing businesses, alongside growing competition from online platforms and lower-cost international providers.
“The crisis is spreading along the supply chains,” Wohlrabe added. “When customers leave or cancel orders, it hits suppliers and service providers with full force.”
‘Considerable pressure’
In the services sector, 7.6% of companies said they felt economically threatened, however this figure rose to almost 20% among accommodation and foodservice businesses. Advertising and market research companies also reported elevated levels of concern, at 14.3%.
Conditions in industry improved slightly compared with previous months, although 7.5% of manufacturing companies still reported ‘considerable pressure’, according to the report. Export-oriented sectors continue to face pressure from high energy and raw material costs as well as competition from Asian manufacturers.
Elsewhere, the proportion of construction firms reporting threats to survival increased slightly, to 7.3%, with the industry continuing to face weak residential demand, lengthy planning procedures and tighter bank financing conditions. Read more here.
