Business Climate for Germany’s Self-Employed Improves

The business climate for the self-employed in Germany improved slightly at the end of the year, finds the latest ifo survey for this segment (“Jimdo-ifo Business Climate Index for the Self-Employed”). The index rose to -17.5 points* in December, up from -18.8 points* in November. “It’s too early to talk of a trend reversal,” says ifo expert Katrin Demmelhuber. “The self-employed are currently a long way from an economic recovery.”

The self-employed assessed their current situation as somewhat better. Their outlook for the first half of 2024 is rather cautious and marked by skepticism. Both indicators remain in negative territory. Developments varied across different sectors of the economy: the climate improved in manufacturing and construction, while a deterioration could be seen in trade and among service providers.

“In these tough economic times, the self-employed are also having more difficulty accessing credit,” Demmelhuber says. At 10.7%, the proportion of survey participants who took part loan negotiations in the fourth quarter of 2023 was once again relatively low (8.3% in the third quarter). However, just under half of these (45.7%) described the behavior of banks as restrictive; this was more than in the previous quarter (37.4%).

The ifo Institute has been publishing the Jimdo-ifo Business Climate Index for the Self-Employed since August 2021. This includes both solo self-employed people and microenterprises (with fewer than nine employees). As in the composite index, all sectors of the economy are taken into account. However, its main focus is the service sector. The index is based on a collaboration with Jimdo, a provider of online tools specially geared toward the solo self-employed and small businesses, and aims to improve the visibility of microenterprises. In addition to Jimdo, VGSD e.V. – Germany’s association of founders and self-employed people – is also helping to attract new participants.

*Balances, not seasonally adjusted