German Banks Call for Bold Reforms to Unlock Mittelstand Investment

The head of Germany’s Savings Banks Association (DSGV) says the country’s Mittelstand—its small and medium businesses—has the financial strength to invest more. But they hold back because reforms are lagging. 

Ulrich Reuter told Reuters the Mittelstand boasts solid equity, stable finances, and ready liquidity. He argued that what’s missing are structural changes to boost confidence and remove barriers. 

While lending rose 16% year-on-year, Reuter noted that most of the funds replaced old assets, not fueled new projects. Companies are doing just what’s necessary—rather than making ambitious investments. 

He urged reforms in areas like the pension system, pointing out that current rules discourage longer working lives. He argued that promising measures—such as tax-free income for retirees—don’t go far enough. 

Reuter said the “autumn of reforms” promised by Chancellor Friedrich Merz has yet to materialize. He believes that releasing the “brake” on investment is key for Germany’s economic recovery.