German Recession Looming Over Nation's Industrial Backbone

(Bloomberg) -- More than half of Germany's small and medium-sized enterprises think Europe's biggest economy could contract next year, hobbled by slowing global growth, trade disputes and a stuttering auto sector.

Almost 53 percent of so-called “Mittelstand” companies surveyed by the BVMW industry association fear that a recession could strike in the next 12 months, the group said Friday. A disorderly U.K. exit from the European Union is also a threat.

The downbeat sentiment contrasts with the end of 2017, when the country had just experienced a year of vibrant growth underpinned by robust domestic spending and flourishing global trade.

Economic data have weakened significantly since then, with economists divided about whether they signal a slower but stable continuation of the expansion, or the start of a downturn.

A persistent shortage of skilled labor is also dampening growth prospects, with more than 92 percent of small and medium-sized enterprises having difficulty filling vacancies, the BVMW said. The group represents around 270,000 firms employing some nine million workers, according to its website.

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Iain Rogers, Piotr Skolimowski

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