The ongoing economic stagnation has threatening implications for the existence of many small business owners. Order books remain empty and planning for the coming months is becoming extremely difficult. According to a quarterly survey by the Munich-based Ifo Institute, almost half of the self-employed are already affected by a lack of orders.

Compared to October, the proportion of those affected rose from 45.3 percent to 47.9 percent in January. "The order backlog of the self-employed is rapidly diminishing," comments Ifo expert Katrin Demmelhuber on this troubling development. "This is accompanied by declining sales, which is a cause for concern." As a result, the mood among the self-employed has significantly worsened at the start of the year.

The current situation is assessed more pessimistically than in the fall, and expectations for the coming six months remain very subdued. As a result, the business climate index fell to -22.6 points in January, from -17.5 in December. "The general economic environment is increasingly unsettling for the self-employed," Demmelhuber summarizes the survey results.

The German economy shrank by 0.3 percent last year, and according to the draft annual economic report of the federal government, only a minimal growth of 0.2 percent is expected for 2024. Minister of Economic Affairs Robert Habeck acknowledged that the situation is "dramatically bad." Expensive energy prices, high interest rates, a faltering global economy, and persistent inflation are weighing on businesses.

To continuously gauge the mood among the self-employed, the Ifo Institute has been calculating the business climate index for self-employed individuals since August 2021. This includes both solo self-employed individuals and small businesses with fewer than nine employees. While all sectors are considered, the focus is primarily on service providers.

The data for the index is collected in collaboration with Jimdo, a provider of online tools specifically for freelancers and small businesses. The Association of Founders and Self-Employed in Germany (VGSD) also contributes to gaining additional participants for the survey.