Small and medium-sized enterprises in different federal states affected by energy crisis to varying degrees

• New representative analysis by KfW Research
• Specific features of each state shape the impact of price increases
• Burden is highest for SMEs in Thuringia, Mecklenburg-Western Pomerania and Lower Saxony/Bremen

Before the Ukraine war, energy costs in the German SME sector were largely manageable. Their share in turnover averaged to 5.8% in 2021. With a median of EUR 9,000, the absolute level of energy costs also reflects a rather moderate burden across all companies. The ongoing energy crisis, however, raises the question of whether the significant price increases are affecting the business community in the federal states differently, and to what extent. A special survey recently conducted by KfW Research on the basis of the representative KfW SME Panel shows that major regional differences do exist.

For the new analysis, KfW Research divided small and medium-sized enterprises in the federal states into four classes based on the share of energy costs in their turnover. The higher the share, the greater the impact of price increases. The main finding of the recent survey was that the largest proportion of enterprises in the class with the highest energy cost burden is located in Thuringia, where one in four businesses (25%) falls into the top category (energy cost share more than 12% of turnover). SMEs are also disproportionately affected in Mecklenburg Western Pomerania (22%) and Lower Saxony/Bremen (18%). The business landscape in Hessen (14%), Baden-Württemberg and North Rhine Westphalia (11% each) is characterised by much lower energy cost shares in turnover. The nationwide share of small and medium-sized enterprises in the class with the highest energy cost is 14%.

“Across the individual federal states, SMEs generally have a similar basic structure, with micro-businesses and service providers predominating. Nevertheless, SMEs have many different regional faces. This also means that the energy crisis can have dramatically different impacts on businesses depending on where they are situated. This is due to the particular features and focal areas of the businesses in each federal state in terms of sector, degree of internationalisation, age and investment activity, all of which influence how they are affected by the current energy crisis”, said Dr Fritzi Köhler-Geib.

The absolute level of energy costs underscores the overall impression that the impact is mixed. While the median cost for businesses in Hessen and Schleswig-Holstein/Hamburg is EUR 6,000 and EUR 7,000, respectively, it is around twice as high in Brandenburg and Mecklenburg-Western Pomerania (EUR 14,000-15,000).