According to the economic survey conducted by the Munich Ifo Institute in April, 8.1 percent of German companies feel that their very existence is in danger. Klaus Wohlrabe, head of the Ifo surveys, commented that “the economic situation remains strained” and added that insolvency numbers are expected to stay at high levels in the months ahead, largely due to geopolitical uncertainties.
The situation in the retail sector is particularly concerning: 17.4 percent of companies feel existentially threatened in this area, marking a new peak. The main issue cited is consumers’ reluctance to spend. This trend is compounded by the growth of online commerce and competition from low-cost foreign providers. Overall, 1.6 percent of all retail enterprises (wholesale and retail) feared that they might have to shut down their business altogether.
Three core problems are impacting companies across all sectors: a lack of orders and weak demand, rising operational and energy costs, and increasing bureaucracy. Many businesses are also reporting growing liquidity shortages because their customers are cutting back spending or becoming insolvent. Wohlrabe noted that “the crisis transmits along the supply chains. When customers drop off or cancel orders, this hits suppliers and service providers with full force”.
Among service providers, 7.6 percent of companies feel their existence is at risk. The hospitality and gastronomy segments show the highest concern, with nearly 20 percent. Furthermore, the proportion is above average in advertising and market research, at 14.3 percent.
In the industrial sector, the threat to existence has slightly decreased to 7.5 percent. However, the pressure remains considerable, as high energy and raw material costs, combined with international competitive disadvantages compared to Asian offerings, are particularly straining export-oriented industries.
The construction industry also saw a slight rise in the threat level, reaching 7.3 percent. The decline in residential construction orders persists, and the sector continues to be negatively affected by long approval processes and the caution displayed by banks regarding construction financing.