German firms play it safe and hold back on investment

Germany’s Mittelstand companies, the small and medium-sized enterprises accounting for more than half of gross domestic product, are holding back on investment amid doubts about economic growth, a bank association said.

“Weakness of investment was not due to a lack of external financing or insufficient equity,” said the DSGV, which represents Germany’s 416 savings banks. “The continuing economic difficulties experienced by many partner countries [that use the euro], as well as geopolitical crises, have reinforced the wait-and-see attitude of many enterprises.”

A gauge of euro-area services and manufacturing released by Markit Economics research company a week ago indicated GDP growth slowed in the final quarter of 2014. In Germany, the measure’s rise in December was the first gain in three months.