A recent Entrepreneur Gallup poll has highlighted a significant downturn in the financial situation of small and medium-sized enterprises (SMEs) in Finland. The survey, conducted in early November with responses from 1,300 SME representatives, indicates that the economic outlook for these businesses has notably worsened, casting a shadow over the country’s entrepreneurial landscape.
As of the survey, only 52% of SMEs viewed their financial situation as very good or fairly good, a decline from 58% in August. Particularly hard-hit sectors include retail, where one in five companies report their financial condition as either fairly poor or very poor. The industrial sector sees 17%, and construction 15%, of businesses in a similarly challenging situation.
Mikael Pentikäinen, CEO of the Federation of Finnish Enterprises, emphasized the growing concern among entrepreneurs. "Many entrepreneurs are worried as the economic situation continues to deteriorate. This anxiety curtails investments and will eventually impact employment," he said, adding, "We need measures to strengthen the confidence of businesses and entrepreneurs in the future. It’s especially crucial to find solutions that help construction sector companies survive this challenging phase."
Pentikäinen also highlighted the need for domestic policy action, including fiscal reform and labor market modernization, as promised by the government. The survey reveals a gloomier future outlook compared to August, with a decrease in the number of businesses expecting improvement and an increase in those anticipating a decline.
The situation has been exacerbated by inflation, affecting 62% of the respondents with increased costs. However, only 37% have raised their prices, leading to deteriorating profitability for 44% of businesses. The survey also indicated that one-fifth of all companies have postponed or canceled investments, with 17% in the industrial sector reporting tightened financing.
Interest rate hikes have particularly impacted the industrial and construction sectors. Additionally, the ongoing war in Ukraine continues to affect businesses, with 41% reporting increased energy costs and 34% experiencing reduced orders due to uncertainty.
This report paints a sobering picture of the Finnish SME sector, underlining the urgency for supportive measures and reforms to bolster these businesses, which are crucial to the national economy.