The business climate among self-employed individuals in Germany has hit its lowest point this year, according to the Ifo Business Climate Index. This downturn reflects a broader economic stagnation, with self-employed workers reporting a lack of orders and increasing pessimism.
Economic challenges for the self-employed
The persistent slump in the German economy is increasingly dampening the mood among the self-employed. The barometer for their business climate fell to minus 18.4 points in August, down from minus 13.4 points in July. This is the lowest level since the beginning of the year, as reported by the Munich-based Ifo Institute on Tuesday in their survey.
The assessment of the current business situation has deteriorated noticeably. Pessimism regarding expectations for the coming months has also increased. “The self-employed cannot escape the downward pull of the overall economy,” said Ifo expert Katrin Demmelhuber. “Currently, there are hardly any signs of optimism to be seen.”
The decline was even more pronounced than in the overall economy, where the business climate index fell by 0.4 to 86.6 points in August. “A central problem remains the lack of orders,” Demmelhuber said. Due to economic uncertainty, both large companies and consumers are hesitant to place orders.
Glimmer of hope in tourism
In many places, self-employed individuals in the service sector or retail reported declining sales, according to the Ifo Institute. However, there was a bright spot in tourism, where the situation improved again in the important holiday month of August.
This view is shared by the service provider Jimdo, with whom the Ifo Institute collaborates for the monthly survey of 1,600 solo self-employed and micro-enterprises. “The whole nation is looking at VW,” said its CEO Matthias Henze, referring to the crisis at the automaker. “Meanwhile, a large component of all economic sectors – the self-employed – is existentially threatened.” Self-employed individuals and small businesses make up 83 percent of all enterprises in Germany.
Economic outlook
Leading institutes have recently lowered their growth forecasts for Europe’s largest economy. Ifo researchers now expect only stagnation this year.
The ongoing economic challenges paint a concerning picture for self-employed individuals and small businesses in Germany. As they grapple with reduced orders and declining sales, the need for targeted support and economic stimulation becomes increasingly apparent to ensure the sustainability of this crucial sector of the German economy.
