Germany's Mittelstand to reduce AI spending in 2025, research reveals

German Mittelstand Slows Down AI Investments

According to a recent study, Germany's small and medium-sized enterprises—collectively known as the Mittelstand—are reducing their investments in artificial intelligence, despite a general increase in AI spending among businesses overall.

Management consultancy Horvath surveyed 200 Mittelstand companies and found that, in 2025, these firms allocated just 0.35% of their revenue to AI technologies, a decrease from 0.41% in 2024.

Meanwhile, the average AI investment across all businesses rose to 0.5% of revenue in 2025, up from 0.40% the previous year. This widening gap means the Mittelstand is now investing roughly 30% less in AI compared to the broader market.

Heiko Fink, who led the study and serves on Horvath's management board, explained that ongoing geopolitical uncertainties have prompted many mid-sized companies to prioritize cost control over innovation.

Fink also noted that the initial applications of AI may not have produced the efficiency improvements that many companies anticipated.

He warned, "If the pace of AI adoption does not increase significantly, the resulting technology gap could become a serious strategic threat."

The report highlighted that bureaucratic challenges and slow digital transformation are major obstacles for mid-sized firms looking to implement AI. Additionally, worries about data security and digital independence are further delaying the rollout of these technologies.

Source: Reporting by Maria Martinez; Edited by Madeline Chambers