Economic growth after Corona: an interview with Prognos boss Böllhoff

Christian Böllhoff

“Demographic change is having an impact on the labor market.”

(Photo: Prognos AG – PHOTOS Coroll)

The interview with Christian Böllhoff takes place as a team meeting, like so many things in these months. For the head of the research institute Prognos, it should stay that way after Corona. The previous frequent flyer has resolved not to jet across Germany for a single meeting in the future – more on this at the end of the interview. An example of how the corona pandemic is accelerating an already pending change in the world of work.

Mr. Böllhoff, according to your study, Germany will not be able to fully make up for the lost growth in the Corona year 2020 in the current decade. What makes you so pessimistic?
Compared to other economic research institutes, Prognos predicts a somewhat deeper slump in 2020 – we’re more likely to be around six than five percent. And we do not see the beginning of the recovery in the first, but rather in the second quarter of 2021. This means that Germany will not have the output of the pre-Corona year 2019 again until 2023. So we lose the economic growth of over three years.

Why are we not able to compensate for the lost years with correspondingly faster growth in the period after 2023?
In the second half of the next decade we will experience what we have all seen coming for 20 years, but some never really wanted to admit it: demographic change is having a full impact on the labor market. The last baby boomers will then gradually retire and Germany is losing 500,000 workers every year. That is why we see trend growth in Germany from 2022 at only around one percent.

Where was the trend growth before Corona?
It was more like 1.2 percent.

But didn’t we in Germany forecast much higher immigration than before? And hasn’t the birth rate also increased somewhat?
Both help – but that’s not enough. After all, this will not reduce the population in Germany. But the number of people of working age is still falling.

What has Corona changed in the future prospects of individual industries?
Aviation and aircraft construction are unlikely to regain their former strength. During the pandemic, companies noticed that many appointments can also be made via video calls. Tourism will come back, but it was business travelers who brought the airlines the profit. The automotive industry is currently experiencing a similar trend break, but this is less due to Corona than to the trend towards climate protection and electric mobility.

Which region in Germany was hit hardest economically by the pandemic?
Maybe not the hardest, but the most surprising hit for me was Hamburg. The city actually has a healthy mix of branches with an unusually large amount of industry for a metropolis of this size. But a lot came together for Hamburg: The city tourists stay away, the hotels, clubs and musical theaters stay empty. Due to the global recession, cargo handling in the port collapsed. The companies saved on their marketing expenses, which is why the media and advertising industry slipped into crisis. And then the decline in aircraft orders also hits Airbus in Finkenwerder. It’s a pretty perfect storm. But Hamburg will also come back after the pandemic.

Has the division of Germany into economic winners and losers regions accelerated or weakened as a result of Corona?
In the short term, the corona crisis has surprisingly little affected some economically weak regions. Where there is little, little can break away in a crisis – for example in some rural districts in East Germany. The basic trends continue, however: metropolises and medium-sized swarm cities continue to grow, including their surrounding areas. These metropolitan areas will continue to attract employed people in the future and can expect disproportionate growth.

However, there are also some surprise winners among the regions with the strongest growth until 2030. Or have you already heard of Rostock’s boom town?
In all honesty – Rostock’s good placement surprised me myself. I had our regional expert explain to me that there is actually a very fresh trend behind this: Attractive medium-sized cities in otherwise very sparsely populated regions suck up infrastructure, jobs and workers from their surrounding areas, which are becoming increasingly less attractive. An attractive university seems to be a key to this: School leavers come with the Abitur and stay after the exam, if they find enough quality of life and attractive jobs.

One could assume that the run on the cities is rather weakening. If you only have to go to the office two or three times a week thanks to home office, you can also live in the country, where the houses are cheaper and the gardens are larger.
We don’t see this trend. Even those who no longer drive to the office every day continue to seek proximity to urban culture and the professional networks that can be found there. You might move a little further out into the bacon belt, but not straight into the countryside. I say: One hour of “one-way” commuting will remain the magical limit for many.

To apply that to your hometown Berlin: Kleinmachnow works, Uckermark still doesn’t work?
Something like that.

More on the subject:

Will your own daily work change permanently due to Corona?
Oh yeah! Before Corona, I was traveling for two to three days every week, mostly for discussions with clients and cooperation partners. I’ve been leading this life for 30 years. So far, I couldn’t even imagine spending an entire week at my desk and feeling good about it. Now I know: It’s actually going very well.

Do you want to handle all appointments in the future using Zoom or Teams?
Not all. I will travel further, but much more slowly. I will no longer fly across Germany for a meeting. Instead, I might take the train to our Freiburg or Munich locations for three or four days, work from there and bundle my customer appointments in the region.

All thanks to Corona …
Well, a little too, because I no longer have Tegel Airport in front of the door.

Mr. Böllhoff, thank you very much for the interview.


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