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Germany’s famed “Mittelstand” sector of small and medium-sized companies (SMEs) has coped well with turbulent prices on the energy markets caused by the Ukraine war,  state development bank KfW. “The current situation of small and medium-sized enterprises with regard to the burden of energy costs is largely relaxed – also because companies have done their homework and reduced their costs through energy-conscious behaviour, for example," KfW chief economist Fritzi Köhler-Geib said. By spring this year, 72 percent of SMEs had already reduced their energy consumption using behavioural changes, such as lowering room temperatures or fuel-efficient driving, and a further 9 percent planned to do so, surveys conducted by KfW Research revealed. “More elaborate measures, such as investments in energy efficiency or in the generation of electricity/heat from renewable energies, have already been implemented by 19 percent and 15 percent, respectively (planned: 16% and 20%),” KfW said.

SMEs employ a large part of Germany’s workforce and have a higher share in economic productivity than in many other high-income economies. That these companies’ “massive” savings efforts paid off is also revealed by a declining share of energy costs among SMEs, KfW said. While 34 percent of companies said that energy costs accounted for a maximum of 2 percent of total sales before the war, this group grew to 42 percent by spring this year - corresponding to around 1.6 million companies. For a further 31 percent, energy costs are between 2 and 5 percent of sales, and for one in five SMEs energy costs represent between 5 and 10 percent of sales. At the same time, the share of SMEs with energy costs exceeding 10 percent of sales halved from 16 to 7 percent, KfW said.