Small businesses are increasingly under pressure - Germany's Mittelstand fights back as insolvencies and job losses rise again

Germany's small and medium-sized enterprises (SMEs), often called the Mittelstand, have faced intense pressure in recent years. While some signs of stabilisation appeared in 2025, many businesses continue to struggle with rising insolvencies and a shrinking share of the economy.

The smallest firms and larger mid-sized companies with over 100 employees have seen the sharpest rise in bankruptcies. Construction, hospitality, and manufacturing were the worst-affected sectors. Job losses linked to insolvencies spiked during the pandemic in 2020-2021, eased in 2022-2023, but climbed again in 2024-2025 as inflation and economic slowdown took hold.

Between 2018 and 2023, the Mittelstand's contribution to total revenue dropped by four percentage points. By 2025, its share of national revenue stood at 26.2%, employment at 53.3%, and gross value added at 40.9%. Despite these declines, SMEs with up to 100 employees showed minor signs of recovery in early 2025.

The Mittelstand now accounts for a smaller portion of Germany's economy than in previous years. While the smallest businesses saw slight stabilisation, broader challenges remain for mid-sized firms. Job losses and insolvencies continue to weigh on key sectors like construction and hospitality.