Still optimistic mood: SMEs are reluctant to invest

Monday, February 01, 2021

Still optimistic mood
Medium-sized companies are reluctant to invest

SMEs are well prepared for the corona crisis. According to a survey, many companies already set the course for digitization in previous years. However, there is reluctance to invest in staff.

In view of the unclear further consequences of the corona pandemic, Germany's SMEs remain cautious with investments and new jobs, according to a study. Although the mood is still predominantly positive and the financial situation of many companies is good, the consulting firm EY sums up in its "SME Barometer 2021". However, more companies than for years have not wanted to increase investments or the number of employees. And depending on the industry, the prospects are assessed very differently.

"All in all, German medium-sized companies are well positioned even in times of crisis," said EY Germany boss Hubert Barth. Many now benefit from having faced change before the outbreak of the crisis and, for example, pushed ahead with digitization. 89 percent of the medium-sized companies surveyed currently rate their situation as good or rather good. That is only three percentage points less than a year ago. While almost three quarters of companies in the chemical and pharmaceutical industries assess their situation in this way, it is not even one in three in the automotive industry. Expectations for the next six months are also the most pessimistic there.

In contrast, the outlook for SMEs as a whole is even more positive than in most previous years. However, the data were collected in November and December, i.e. mostly before the still existing lockdown. According to the EY, 57 percent said that they had managed to get by without government support until then. The rest resorted to one or more offers, most – 38 percent – to short-time work benefits. Here, too, the auto industry was most frequently affected. Almost every fourth company in the industry is currently critical of the situation. Across all industries, it is only about every 14th.

There is a general reluctance to spend when it comes to spending. Only 16 percent want to increase their investments in the coming months. That is the lowest value since 2007. The vast majority (78 percent) want to keep it stable. Another 16 percent want to increase the number of their employees – as few as since 2010. That is understandable in view of the unclear prospects, said EY medium-sized company expert Michael Marbler. At the same time, however, there is a risk that innovations will fail to materialize and that competitiveness will suffer in the medium term. "The reluctance to hire new employees can quickly fall on the company's feet," said Marbler. More than half still complain about the shortage of skilled workers as the biggest problem for their own development. "Corona doesn't change that either."