2024 outlook for German startups grim, says KfW Investment bank

Admin I Monday, June 17, 2024

 

BERLIN – Business startups rose by around 3% in Germany last year, after a decline in 2022, the state-owned KfW investment bank reported on Monday, but said things are not looking good this year.

According to the KfW, 568,000 people took the decision to set up on their own in business last year. But the number of those actively planning to start a business has declined to 3.6% this year from 4.5% last year.

“Entrepreneurship is stuck in a low,” KfW economist Fritzi Köhler-Geib said.
She cited financial difficulties faced by would-be entrepreneurs. “We definitely have to improve financial knowledge,” Köhler-Geib said. The bank interviews a representative sample of 50,000 German residents every year.

She predicted the downward trend would continue into 2024. According to the KfW data, around twice as many plans to start a business are abandoned as are in fact realised.

Entrepreneurship in Germany is relatively weak, with just 24% of people aged between 18 and 67 preferring self-employment to a job with a company, independent of their current situation, according to KfW figures.

The figure was twice as high at the start of the millennium, with overall economic factors, such as a labour market boom since 2006, playing a role.

Another factor is an ageing society, with those under the age of 30 more likely to set up on their own.

Financial risks are a factor for 73% of people when considering self-employment, followed by bureaucratic hurdles for 69%. Other factors are fears concerning income, social security and raising funding.