Economic downturn looms for small and medium-sized enterprises: urgent need for action for a strong Europe, according to an economic survey released by Mittelstandverbund in Berlin, Germany. Sentiment among cooperating SMEs has clearly weakened. Sales and earnings, as well as the investment climate, have recently declined. As the EU elections approach, companies also see the reduction of over-regulation as a prerequisite for Europe as a strong and competitive business location. This is shown by the current economic survey of the Mittelstandverbund among its members for the 1st quarter of 2024.
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The cooperating SME sector has started the new year in a hangover mood. While the economic situation had brightened slightly at the end of last year, it was on a downward trend in the first three months of 2024 – at 25%, a quarter of the network groups rated the economic status quo as poor (compared to Q4 2023: 18.5%). At the same time, around 57% of the companies reflected a satisfactory result (Q4 2023: 51.9%). For around 18% of the collaborations, there was an upturn between January and March (compared to Q4 2023: 29.6%).
This trend is also reflected in sales – in the 1st quarter of 2024, sales figures were down for around 63% of the companies from the cooperating SME sector, which corresponds to an increase of more than 14 percentage points compared to the final quarter of 2023 (compared to Q4 2023: 48.1%). At the same time, sales remained stable for around 20% of the groups (Q4 2023: 25.9%), while sales developed positively for 18% of the companies (Q4 2023: 25.9%). A similar picture was also seen for the affiliates of the cooperations: Here, more than 55% of the companies reflected declining sales (compared to Q4 2023: 44.4%),
Overall, expectations remain rather gloomy: around 45% of companies expect sales to deteriorate in the coming months, while around 38% expect them to stagnate.
More than 14% of the companies surveyed increased their investment volume from January to March 2024, which corresponds to a decrease of around 12% percentage points compared to the previous quarter. Above all, the outlook seems even less optimistic: more than a third of companies expect investments to fall in the near future, while only around 20% expect an increase.
Europe is coming under increasing pressure and is in danger of losing its attractiveness as a business location. So what are the prerequisites for remaining competitive? 'Reducing over-regulation' was the clear winner with around 84% of the responses, followed by modernising tax law and reducing the tax burden on companies (58.9%). However, simplifying and accelerating approval procedures is also a priority for the companies of the cooperating SMEs (55.4%). The creation of a European digital infrastructure (33.9%), the simplification of labour market access for skilled workers from third countries (25%) and the achievement of a single European procurement market (23.2%) were also mentioned relatively often.
More information:
Der Mittelstandverbund
www.mittelstandsverbund.de