Almost one in two medium-sized German companies is considering closing down or relocating abroad, citing too much bureaucracy and higher taxes as arguments.

The damning indictment of the German business climate was revealed in a survey conducted by the Federal Association of Medium-Sized Enterprises (BVMW), writes Remix.

According to the survey, 26 percent of all directors of medium-sized companies in Europe’s superpower have considered closing their businesses, while 22 percent have expressed interest in moving their operations abroad.

Directors cited a constant stream of new regulations that hamper their ability to work in Germany and a high tax burden as the two main reasons for their dissatisfaction.

A third of the directors believe that Germany has become too bureaucratic to do business in. Meanwhile, more than a quarter cited higher taxes and customs duties as their biggest obstacle, while others cited a shortage of skilled workers as a barrier to their operations.

“The results of our survey are more than just a warning sign,” said Markus Jerger, CEO of BVMW.

Small and medium-sized enterprises (SMEs) are the backbone of the German economy, employing more than 40 million of Germany’s 45 million workforce.

And many feel they are being taken advantage of with high taxes, or left to fend for themselves by the federal government. A particular concern for SMEs is the digitization of the industry, which according to the BVMW creates a gap between multinationals that are financially able to adapt their activities to the digital age and multinationals that cannot afford to do so.

“To ensure that our economy remains competitive in the future, we need a boost in digitization!” said Jerger recently.

The performance of the state and public administration lags behind. And dependence on the big technology giants is increasingly limiting the options for medium-sized companies,” he added.

Not only German companies have less confidence in the country as a place to do business. Foreign investment in Germany has fallen over the past five years, with last year the lowest level since 2013.

Confidence in the German economy has plummeted recently, according to the Ifo Business Climate Index, with the country ranked fourth from bottom in January for competitiveness in a survey that included 21 industrial countries.

“If nothing is done, the burden of bureaucracy will kill family businesses,” Rainer Kirchdörfer, president of the Foundation for Family Businesses, warned at the time.