Savings Bank President Reuter: More investments, less bureaucracy

Despite high levels of pressure, small and medium-sized businesses are holding their own. However, they urgently need investment—including private capital—and a new entrepreneurial spirit, according to the German Savings Banks Association (DSGV). What are the prospects?

This article is part of the special feature on bureaucratic madness in the skilled trades.

Despite high energy prices, a growing shortage of skilled workers, rising labor costs, and the challenges of digitalization, Germany's small and medium-sized enterprises (SMEs) remain a key pillar of the economy. This is the conclusion of a recent analysis by the German Savings Banks Association (DSGV).

The financial situation of SMEs remains stable, reports the German Social Insurance Association (DSGV). The average equity ratio remains stable at 37 percent, which speaks to the robustness of SMEs, which have weathered the crises well.

Strengthening corporate culture: Solutions for rising costs

Dr. Ulrich Reuter, President of the German Savings Banks Association Photo: © DSGV

However, rising personnel costs (most recently up seven percent) and high energy and material costs are increasingly suffocating companies. "The foundation on which our prosperity rests is coming under pressure," explained DSGV President Ulrich Reuter. Small and medium-sized enterprises (SMEs) should be a greater focus of economic policy, as the shortage of skilled workers is also becoming an increasing problem. SMEs must be "nurtured and supported," Reuter added.

Because: "Three out of four companies cannot easily pass on rising energy costs to their customers." This weakens sales returns in some sectors. Building construction and energy-intensive industries are particularly affected.

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Overall, the growth prospects for 2024 to 2026 are positive , particularly for sectors such as IT, healthcare, sports, personal services, and recreation. "We are also seeing positive developments in civil engineering and the expansion of district heating networks, power lines, and broadband infrastructure," the association president told the press. These challenges are solvable if the entrepreneurial spirit is rekindled. "Today, there are eleven employees for every self-employed person; ten years ago, the ratio was nine to one. Entrepreneurial spirit is waning. It is therefore crucial that we strengthen the startup culture in Germany ."

Mobilizing private capital

To secure the long-term economic success of medium-sized companies, the Savings Banks and Giro Association expects more investment in infrastructure – in more efficient digital administration, in well-developed railway lines and waterways, more powerful electricity grids and nationwide broadband networks.

"Germany and Europe can only catch up with the US and China if economic growth is at the heart of the political agenda," emphasizes the DSGV president. However, not all investments can be borne solely by public budgets. That is "completely out of the question." The task is simply too great. Therefore, the mobilization of private capital is now crucial. "Savings banks can play a decisive role here by mobilizing private capital."

Bureaucratic madness: warnings from the butcher

For the future of Europe, it is crucial that companies are willing and able to invest. This requires tax breaks for businesses and a "decisive reduction in bureaucracy ." "The stranglehold of bureaucracy must be loosened to create more freedom for companies," said DSGV President Reuter. On average, a self-employed person spends one day a week dealing with bureaucracy.

Reuter cites an example from the butcher's trade : "Butchers have to include warnings about things that should be obvious. For example, that customers must heat the minced meat before eating it . Apart from minced meat and steak tartare, you shouldn't eat minced meat raw; everyone knows that. But anyone who reads such a warning wonders if there's something wrong with the product—and with the bureaucracy."

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