SMEs 2026: What the current economic situation means for businesses

The German economy is entering the final months of the year with a slight growth advantage. According to preliminary data from the Federal Statistical Office, gross domestic product rose by 0.2 percent in the third quarter of 2026 compared to the previous quarter. However, after 0.4 percent in the first quarter and 0.3 percent in the second quarter, expansion is losing momentum. Consumption provided slight positive impulses, while investment declined. The previously stronger export development also weakened.^[1]

For SMEs, this leads to a sober assessment: The overall economic recovery continues, but does not yet provide a reliable basis for broad-based expansion.

Better Expectations Do Not Replace Orders

Business sentiment paints a cautiously more positive picture. The ifo Business Climate Index rose from 89.9 to 90.2 points in October. Companies looked more confidently at the coming months, although they assessed their current business situation somewhat worse. In the manufacturing sector, both the situation and expectations improved, while service providers assessed their ongoing business more poorly.^[4]

For an SME supplier, this could be an opportunity to prepare sales and production planning for additional demand. A larger investment cannot yet be inferred from this alone. Between a positive customer inquiry, a binding order, and its payment lie different economic risks.

These stages should therefore remain clearly visible in business management. A well-stocked list of quotes is not yet a secured order book. And a high order book is of little help if materials must be pre-financed, payment terms are long, or the calculated margin is not achieved.

Energy Makes Planning More Expensive

According to Destatis' preliminary estimate, consumer prices were 2.8 percent above the previous year's level in October. Compared to September, they fell by 0.2 percent. Core inflation excluding food and energy was 2.1 percent. Energy remained particularly striking with a price increase of 12.2 percent compared to October 2025. The figures were published on October 30 and are preliminary.^[2]

The consumer price index does not directly reflect the costs of an individual company. A production facility with high electricity requirements is affected differently than a consulting firm or a regional retailer. Nevertheless, the development shows why a blanket extrapolation of previous costs may fall short when planning for 2027.

Possible price increases also require differentiation. Which services are essential for customers? Where is competition high? Which orders tie up particularly much staff or capital? These questions are more helpful for pricing than a uniform surcharge on all services.

The Labor Market Does Not Provide Easy Relief

According to the Federal Employment Agency, 2.955 million people were unemployed in October. This was 40,000 fewer than in September, but 44,000 more than a year earlier. The unemployment rate was 6.3 percent. Seasonally adjusted, unemployment increased by 4,000 compared to the previous month. The usual decline in autumn thus is still no evidence of a fundamental recovery.^[3]

For SME employers, this does not allow for a blanket easing in recruiting staff. The availability of suitable employees depends on qualifications, location, and activity. At the same time, weaker utilization should not automatically lead to short-term personnel decisions.

First, it is worth looking at the organization: Where do overtime hours arise despite free capacity? Which tasks are being done twice? Which tasks depend on a single person? Especially in small commercial teams, missing substitution rules and unclear responsibilities can cause costs that are hardly visible in the personnel budget.

Financing Remains a Question of Resilience

The European Central Bank left its key interest rates unchanged on October 29. The deposit rate is 2.50 percent, the main refinancing rate 2.65 percent. At the same time, the ECB pointed to rising energy prices, risks to growth and inflation, and tightened financing conditions. It did not commit to a specific further interest rate path.^[5]

For SME borrowers, however, the key interest rate is only one part of the calculation. The actual financing price depends on, among other things, on creditworthiness, collateral, term, and loan structure.

An investment decision should therefore remain viable even under less favorable assumptions. What happens if the planned additional revenue occurs later? How does liquidity change with longer customer payment terms? What ongoing obligations arise in addition to the loan installment? Such questions should be considered before ordering a machine or signing a long-term contract.

The Hospitality Industry Shows the Limits of Nominal Growth

The latest available hospitality data illustrates how strongly revenue and economic development can diverge. In August 2026, according to preliminary data, revenue in the catering industry was nominally 2.4 percent above the previous year's month, but price-adjusted 5.4 percent below it. The publication was on October 20; it thus does not describe the business situation in October. Furthermore, no statement about profits can be derived from revenue data alone.^[6]

For owner-managed businesses, the distinction is nevertheless essential. Higher cash revenue can coincide with weaker real business development. Only a joint consideration of revenues, cost of goods sold, personnel expenses, and other operating costs shows whether more economic leeway has been created.

What Now Belongs in the Planning for 2027

The current data does not result in a uniform course of action for SMEs. A growing specialist provider faces different decisions than an energy-intensive business with weak utilization. What they have in common is the need for timely, resilient company figures.

• Evaluate orders by profit: Consider contribution margins, capacity requirements, and pre-financing together.
• Plan liquidity forward: Regularly update expected inflows and outflows and account for delays.
• Calculate investments with resilience: In addition to the expected course, model weaker demand and higher costs.

The economic data provide the external framework for this. Whether a company needs additional employees, should adjust prices, or postpone an investment, however, is decided by its own order, cost, and liquidity situation. That is exactly where the planning for 2027 must start.