German Vice-Chancellor Robert Habeck said the consequences of coronavirus, Brexit and the conflict in Ukraine mean that supply chains are badly affected as small and medium-sized enterprises (SMEs) suffer. German SMEs tend to import raw materials, intermediate products or services from other European countries, as around 24% of the 3.8 million SMEs have suppliers there.
Mr Habeck described the economy as being in “staccato mode”, as it was reported by banking group KfW that three-quarters of manufacturing SMEs are experiencing supply bottlenecks.
Companies find that their key products only arrive after delays.
The Federal Minister of Economics said: “It no longer works properly, first things are produced, then things are canceled.”
As the government and Mr Habeck attempt to address these supply issues, a series of programs have been launched by the government to support SME organisations.
Habeck held meetings with more than 40 SMEs on Monday to discuss ongoing issues.
During the talks, the German minister directed the companies to the special loans and guarantees provided by KfW.
However, he remained firm and noted that the policy was not working to mitigate the impact of difficult global economic situations with billions of euros in support.
The KfW Internationalization Report 2022 reports that alongside manufacturing, the construction industry has also been affected, with three-quarters of companies suffering from supply issues since last September.
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German imports of goods from the UK fell 8.5% last year, showing the extent of the damage caused by the extra costs and bureaucracy introduced by Brexit.
Carsten Brezeski, global head of macroeconomics at ING, said: “Brexit has left its mark on German trade as the UK has been dropped from the list of the five most important trading partners.”
Additional reporting by Monika Pallenberg.