Current small business study by VR Smart Finanz / Despite improved sentiment: Small businesses view change of government with skepticism (PHOTO) Eschborn - Small businesses appear to be gradually overcoming their low mood, according to the current stud...

Although they assess their business development as only slightly improved compared to 12 months ago, companies are once again more optimistic about the future. The VR Smart Finanz Small Business Index for the 12-month review shows an increase of three points compared to the previous survey in autumn 2024. However, at a value of 0, it remains at a low level. Looking ahead, the index shows an increase of 6 points to +19. The change of government and the coalition paper contribute only marginally to the positive future expectations, even though respondents welcome the plans for tax relief and bureaucracy reduction.

Improved mood among small businesses

Although small businesses assess their economic situation as well as their sales and profit trends over the past 12 months as slightly improved, liquidity bottlenecks remain at a high level at 53%, more than three times higher than in the pre-crisis year of 2019. Businesses are more optimistic about the future, and the majority (around 44%) expect an improvement in their economic situation and an increase in orders.

Mixed view of the change in Berlin

Whether the change of government is contributing to the upswing in sentiment remains unclear. Only one-third (32%) of small businesses say they are more confident about the future thanks to the new government. However, over half (53%) expect Germany to return to the growth path. However, companies express clear expectations of the new government: reducing bureaucracy, lowering energy costs, and infrastructure investments are the most important areas for action. Only 3% of respondents see no need for action in these areas.

New debt for defense capabilities and infrastructure improvements is welcomed

The challenges facing small businesses are similarly significant to the expectations. In addition to cost increases (55%), they are most concerned about declining demand (46%) and the legal framework (38%). A potential labor shortage, on the other hand, is only relevant for 22% (-4 percentage points compared to autumn 2024). Geopolitical crises are also causing uncertainty. Around three-quarters of respondents are worried about the tariff conflict with the USA and the war in Ukraine. In this context, the majority consider the planned new debt for defense capabilities and infrastructure improvements to be necessary. However, 55% of respondents are concerned that this could endanger Germany's economic stability.

Skeptical view of the coalition agreement

Given the complex issues, small businesses view the coalition agreement with skepticism. Only one-fifth of respondents (22%) expect concrete benefits for their own company, even though they welcome the plans for reducing bureaucracy and tax relief. However, they miss measures that address their concerns more specifically and would like to see more emphasis on reducing bureaucracy.

Bureaucracy is the biggest obstacle to investment

When it comes to bureaucracy, small businesses are experiencing considerable pressure. 66% of respondents consider the German legal and bureaucratic framework a serious burden, and one in four small businesses even rates the situation as "catastrophic." Ninety percent of respondents feel burdened primarily by tax obligations, and more than two-thirds report data protection and approval procedures cost time and resources. Bureaucracy is also the biggest obstacle to investment for small businesses (74%), alongside market uncertainty (74%) and economic policy (68%). In this context, the trend toward investment reluctance has continued: Only 46% of small businesses invested as planned in the past 12 months, and 43% have postponed or canceled investments altogether.

Investments are expected to rise again – mainly for business expansion

There are positive signs for the future: 61% of respondents indicate a need for investment. At the same time, the majority are planning concrete investments, primarily in business equipment (71%), product and service expansions (62%), digitalization/automation projects (61%), and energy efficiency/sustainability (50%). The focus is not only on replacement investments, but also, for the most part, on plans to expand business operations. Almost a quarter of respondents (23%) see the government's planned increased depreciation options as a clear investment incentive.

Clear message to politicians

The study makes it clear that while the challenges are diverse, small businesses are nevertheless looking to the future with confidence. They not only expect more growth in Germany but also want to invest again themselves. Policymakers are now called upon to create an investment-friendly climate for small businesses. The measures provided for in the Federal Government's Immediate Investment Program are already an important first step. Furthermore, it is also important to consistently push forward with the issue of reducing bureaucracy in order to sustainably improve the economic policy framework for small businesses.

About the study: The sentiment barometer is a regular study conducted by VR SmartFinanz since 2019, together with CFin - Research Center for Financial Services at Steinbeis University, on the situation and needs of small businesses. The survey was conducted from March 28 to April 9, 2025, among 300 business customers, commercial customers, self-employed individuals, and small and medium-sized enterprises with annual sales of up to six million euros. Subsequently, an additional survey of 150 small businesses was conducted between April 23 and April 30, 2025, on the current assessment of the coalition agreement.

Further details on the study and its results can be found at https://www.vr-smart-finanz.de/stimmungsbarometer-2025-06 .

Press contact:

Annette Spiegel, Head of Marketing & Communications, Phone +49 6196 99 4385, email:[email protected]

Further material: http://presseportal.de/pm/170303/6052732OTS: VR Smart Finanz AG