German small and medium-sized businesses expressed a vote of no confidence in the European Central Bank's interest rate policy, according to a survey obtained by Handelsblatt.
The German Association for Small and Medium-Sized Businesses found that 68 percent of its members view ECB President Mario Draghi's interest rate policy as a risk to the larger economy, in a survey carried out ahead of Mr. Draghi's remarks on Thursday. While in the ECB's last press conference before its summer break, Mr. Draghi said its monetary policies were working despite the shock Brexit vote, many in Germany are worried.
"The European Central Bank has created uncertainty among German small and medium-sized businesses," Mario Ohoven, president of the association, told Handelsblatt. "Its plan to spur investment through low interest rates and more credit hasn't gained traction."
The ECB has kept interest rates at zero and introduced a negative rate of 0.4 percent for deposits stored at the central bank, part of an effort to spur growth in the euro zone.
The instruments used by the ECB are more likely to end in a speculative bubble than real economic activity.
Though these measures are supposed to benefit the business community by reducing financing costs, Mr. Ohoven is calling for an "end to the zero interest rate policy" on behalf of small and medium businesses.
Of the businesses surveyed, 40 percent expressed a neutral view and 40 percent expressed a negative view of the impact the ECB's policy was having on their individual business situation.
"The instruments used by the ECB are more likely to end in a speculative bubble than real economic activity," one businessperson said in the survey.
Though 56 percent of German businesses with more than 50 employees reported lower financing costs, they expressed concern that savings and pensions could take a hit.
Germans have traditionally preferred to park their earnings in savings accounts, which are particularly sensitive to low interest rates, as opposed to higher-risk financial instruments.
Another businessperson said the ECB's interest rate policy would be the death knell of small banks, the "best partner of small and medium businesses."
More than 400 savings banks in Germany held around €800 billion ($881 billion) in deposits in 2015. These independent banks, which form a decentralized network, operate locally and are committed to lending to local customers and businesses. They are often backed by regions or communities.
A study by Germany's central bank, the Bundesbank, found savings banks receive 80 percent of their profits from interest-related income. With benchmark rates at zero and ECB deposit rates in the negative, many savings banks will either have to cut costs or pass them on to customers, including businesses.
Some larger savings banks have already imposed punitive interest rates on business customers. The rates range from -0.3 to -0.5 percent for balances over €5 million.
Under pressure from online competition and low interest rates, many savings banks are closing branches. Between 2007 and 2013, they shuttered 1,000 branches across Germany.
The ECB's low interest rates have also hit pensions. Many Germans have state-subsidized private pensions to supplement their public pensions.
Known as Riester policies, named after a former labor minister, these private plans are generating increasingly meager returns due to low interest rates.
Uwe Laue, chief executive of the insurer Debeka, told Handelsblatt in May that costs will soon surpass earnings and, as a result, some insurers will stop offering Riester policies altogether. Last year, the number of Riester policies fell to 11 million, the lowest level since 2011.
The German government, already skeptical of ECB policy, has become increasingly critical in public. In April, Finance Minister Wolfgang Schäuble said low interest were causing "extraordinary problems" in Germany.
"It is undisputable that the policy of low interest rates is causing extraordinary problems for the banks and the whole financial sector in Germany," Mr. Schäuble told Reuters news agency. "That also applies for retirement provisions."
Frank Drost is a Handelsblatt Editor in Berlin, covering financial supervision and banks. To contact the author: [email protected]