Self-employed anticipate a worsening business environment according to the Jimdo-ifo business climate index
Declining Business Climate for Freelancers and Small Businesses in Germany's Service Sector
According to the latest findings from the ifo Institute, released on 11 August 2025, the business climate for freelancers and small businesses in Germany has taken a turn for the worse. The Jimdo-ifo Business Climate Index, which measures the sentiment of these businesses, dropped from -15.7 points in June to -16.9 in July.
Almost half (43.6%) of self-employed respondents reported having too few orders in July, a decrease from 48.4% in April, but still significantly higher than the broader economy’s 36.7% shortage rate. The service sector, which accounts for the majority of self-employed and microbusinesses, showed particular weakness, with many service providers expecting tougher times and declining revenues ahead.
The retail sector among small businesses also experienced a notable downturn, with worsening current business assessments and pessimistic expectations. Service providers in July more frequently evaluated their ongoing businesses negatively and revised their expectations downward. More respondents expected declining turnover in July due to the worse order situation.
Katrin Demmelhuber, an ifo expert, stated that the order situation for many freelancers remains critical and they are under significant economic pressure. The figures provided are not seasonally adjusted.
The current trend suggests no immediate recovery, signaling prolonged challenges for self-employed and small service businesses in Germany as of mid-2025. The Jimdo-ifo Business Climate Index has been tracking these segments since August 2021.
In conclusion, the recent trend indicates a declining business climate for freelancers and small businesses in Germany’s service sector, with persistent order shortages and subdued expectations signaling ongoing economic difficulties.
Freelancers and small-business owners in Germany's service sector are facing ongoing economic difficulties, as the business climate continues to decline, with persistent order shortages and subdued expectations. The service sector, being the majority of self-employed and microbusinesses, is experiencing particular weakness, with many service providers expecting tougher times and declining revenues ahead.
