MittelstandsMonitor 2010 - Small and Medium-Sized Enterprises Stabilised Economy During Crisis

Small and medium-sized enterprises were strongly affected by the severe economic crisis in 2009. However, small and medium-sized enterprises overall stabilised the economy. Large economies aiming to a large extend at the global market were especially affected by the recession. The crisis did not affect small and medium-sized enterprises that much as these enterprises focus on the domestic market. The economic crisis negatively affected the profit situation. Nevertheless, most small and medium-sized enterprises still want to make investments. Many enterprises plan to at least make replacement and rationalisation investments to keep their manufacturing plants up to date. Moreover, the majority of small and medium-sized enterprises want to bind professionals to their firms. The economic environment remains fragile. The expected increase in GDP for 2010 by about 1.5 percent is too small to overcome the effects of the crisis.

These are the main findings of the MittelstandsMonitor 2010. The annual report is conducted by the KfW Bankengruppe in cooperation with Creditreform, IfM Bonn, RWI Essen and ZEW Mannheim and was presented in Frankfurt this Wednesday. "The MittelstandsMonitor shows that especially small and medium-sized enterprises helped to overcome the crisis. This encourages us to continue to support small and medium-sized enterprises in particular", says Dr. Ulrich Schröder, chairman of the management board at KfWBankengruppe.

The latest MittelstandsMonitor indicates that there were considerably more start-ups in 2009 compared to the previous year. A reason for this is the worsened situation on the labour market due to the crisis. Start-ups founded to escape unemployment make up a large percentage of all start-ups in Germany. Unemployed persons on average start smaller projects. So-called emergency start-ups are abandoned after a short time more often than other start-ups. In 2009, the economic crisis caused a jump in bankruptcies of enterprises by approximately 16 percent to a total of 34,300 cases. Another increase in bankruptcies of enterprises is expected for 2010.

Labour Shortage Despite Economic Crisis

Despite the economic crisis, many enterprises had difficulties in finding new qualified employees. In 2009, one third of enterprises looking for new staff had difficulties in filling vacancies for skilled workers and executives. Reasons for this were the lack of suitable applicants as well as insufficient incentives by enterprises. However, small and medium-sized enterprises are as attractive for applicants to be their future employer as larger enterprises.

Small and medium-sized enterprises finance their innovations with over 70 percent of equity capital and only 12 percent of bank credits. General investments on the other hand were financed by 50 percent of equity capital and one third of bank credits. The information gap between enterprises and external loan creditors concerning the profit potential of planned innovations frequently prevents the financing by credits. Especially highly innovative enterprises are effected by this. The strong dependence on equity capital bears the risk that enterprises cannot realise their innovations due to financial problems in economic crises.

For further information please contact

Dr. Georg Licht, Phone: +49 (0)621/1235-177, E-mail: licht@zew.de