Germany’s vice chancellor Robert Habeck has declared that the consequences of Coronavirus, Brexit and the conflict in Ukraine mean supply chains are severely impacted as Small and Medium-Sized Enterprises (SMEs) suffer. Germany’s SMEs tend to import raw materials, intermediate products, or services from other countries in Europe as approximately 24 percent of the 3.8 million SMEs have suppliers there.
Mr Habeck described the economy as in “staccato mode” as it has been reported by the KfW banking group that three quarters of SME manufacturing companies experience supply blockages.
The companies are finding that their key products only arrive after delays.
The Federal Minister of Economics said: “It doesn’t work smoothly anymore, first things are produced, then things get cancelled.”
As the Government and Mr Habeck attempt to address these supply issues, a series of programmes have been launched by the Government to support SME organisations.
Mr Habeck held meetings with over 40 SME companies on Monday to discuss the ongoing issues.
During the meetings, the German Minister pointed the companies in the direction of the special loans and guarantees supplied by KfW.
However, he stood firm and noted that politics does not function to soften the impact of challenging global economic situations with billions of euros in support.
The Internationalisation Report 2022 from KfW reports that alongside manufacturing, the construction industry has also been affected with three quarters of companies suffering from supply issues since last September.
Overall, the report found that in September 48 percent of SMEs were affected by supply chain woes which decreased to 42 percent in March.
Imports from the UK are causing a challenge alongside those from Russia and China.
A small amount of 3.1 percent of SMEs maintain import-side trade relations with the UK with a smaller share of 2.6 percent procuring raw materials or intermediate products from Russia.
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Germany’s imports of goods from the UK fell by 8.5 percent last year which signified the extent of the damage caused by the extra costs and red tape that was introduced by Brexit.
Carsten Brezeski, the global head of macroeconomics at ING said: “Brexit has left its mark on German trade as the UK dropped out of the five most important trading partners list.”
Additional reporting by Monika Pallenberg.