Business sentiment among Small and Medium Enterprises (SMEs) in Saxony-Anhalt remains disappointing - Business sentiment in Saxony-Anhalt's small and medium enterprises (SMEs) remains pessimistic
In Saxony-Anhalt, the economic sentiment among mid-sized businesses has taken a downturn in 2025, according to recent reports. The region is grappling with a range of structural and economic challenges that have dampened business optimism.
The overall economic output of Saxony-Anhalt is expected to stagnate or grow modestly this year, limiting the momentum for business growth. This contrasts with some stronger growth seen in other parts of eastern Germany, signalling subdued market conditions locally.
Labor market difficulties, such as short-time work and changing patterns in job vacancies, are also impacting mid-sized companies in Saxony-Anhalt. The number of short-time workers and fluctuations in unemployment rates indicate potential concerns about future workforce availability and costs.
Saxony-Anhalt is undergoing structural transformation, particularly in sectors like mining and energy. While efforts are being made to promote resilience through local procurement and collaboration with SMEs, the transition may create uncertainty and adjustment costs for mid-sized businesses.
Competitive pressures in logistics and supply chains are another challenge. As businesses across Germany face rising demands for flexibility, automation, and compliance with regulations, mid-sized enterprises in Saxony-Anhalt might struggle to keep pace with larger competitors and evolving market conditions.
Martin Plath, the manager of Creditreform in Halle, echoes these sentiments, stating that mid-sized businesses in Saxony-Anhalt do not believe in a swift economic recovery. He also notes that the economic recovery has been postponed until next year, with industry weaknesses and consumer restraint burdening these businesses.
The retail and service sectors are particularly affected, with declining sales and a shift towards online retail burdening brick-and-mortar stores. According to a survey, only 49.5% of the 410 companies surveyed described their situation as good or very good, a decrease from 51% in the previous year.
Bureaucracy is causing an additional burden on the growth of businesses in Saxony-Anhalt. Promised cost relief has not yet materialized, and rising costs due to administrative burden are a frequently cited problem.
However, there is some positive news. Axel Lindner, deputy head of the macroeconomics department at IWH, states that companies in the manufacturing sector in Saxony-Anhalt plan to expand investments and increase staff. Yet, expectations are still dampened, with only one in five companies expecting increased profits.
Despite the investment rate being above the federal average, the lack of skilled workers is hindering the recovery. Many companies in Saxony-Anhalt are questioning their location, and some are even contemplating relocating.
In conclusion, the decline in economic sentiment among Saxony-Anhalt’s mid-sized firms reflects a combination of economic stagnation, labor market challenges, structural change pressures, and competitive dynamics in key sectors. The negative assessment of the situation, especially in retail, indicates persistent weakness in private consumption.
The community and employment policies need to address the labor market difficulties in Saxony-Anhalt, such as short-time work and fluctuating unemployment rates, to provide support for mid-sized businesses. The finance sector should also focus on initiatives that lower bureaucratic costs and reduce administrative burden to support the growth of businesses in the region.
With the retail and service sectors being particularly affected, employment policies should aim to boost private consumption and promote online retail strategies that can help brick-and-mortar stores remain competitive. Furthermore, the business environment in Saxony-Anhalt could benefit from policies that attract skilled workers, yet alleviate the issue of finding enough trained personnel for mid-sized enterprises.
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