German SMEs Report Growth Amid Investment Reluctance
German small- and medium-sized enterprises grew turnover to 5.3 trillion euros in 2025 but face investment hurdles due to high costs and geopolitical tensions.
Small- and Medium-Sized Enterprises (SMEs) in Germany demonstrated financial resilience in 2025, reporting an aggregate turnover of 5.3 trillion euros, a 1.5 percent year-on-year increase. According to a survey by the KfW Development Bank, average profit margins rose to 7.5 percent, and over 51 percent of these businesses maintained an equity ratio above 30 percent.
Despite this stability, the sector shows significant investment reluctance. Half of the surveyed SMEs invested no more than 5.4 percent of their turnover back into their operations, citing elevated material and energy prices alongside increased wage burdens.
Reports from RSM Ebner Stolz and the German Savings Banks and Giro Association indicate that the sector has reached a critical turning point. They attribute this shift to erratic U.S. trade policies, geopolitical tensions, and declining competitiveness, which have fundamentally altered the economic landscape. The German Savings Banks and Giro Association noted that international business and transformation are now essential for the long-term survival and competitiveness of the sector.
