Uncertainty Dampens the Mood of the Self-Employed in Germany

Uncertainty among the self-employed in Germany has increased. As a result, the business climate for this segment has deteriorated, according to the latest ifo survey in March (“Jimdo-ifo Business Climate Index for the Self-Employed”). The index fell to -15.6 points*, down from -14.6 points* in February. “Contrary to the situation in the other sectors of the economy, the self-employed are experiencing increasing doubt,” says ifo expert Katrin Demmelhuber.

While uncertainty in the economy as a whole declined two months in a row, it increased among the solo self-employed and microenterprises surveyed in March. Their assessments of the current business situation deteriorated and they also expect business to decline over the next six months. “The fact that the self-employed are acting with caution is reflected in their investment behavior,” Demmelhuber says. Just under one-third of those surveyed are planning to invest less in the current year, while only one in six wants to increase investment. This means that the investment plans of the self-employed are lagging behind those of the economy as a whole.

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