The second lockdown divides the economy

Düsseldorf The tough restrictions that the federal and state governments have decided to combat the pandemic are causing controversy in the German economy. Anton F. Börner, President of the Federal Association of Wholesale and Foreign Trade, supports the new partial lockdown. The measures are “consistent and correct”, emphasizes Börner.

Ingrid Hartges, General Manager of the Hotel and Restaurant Association Dehoga, sees it completely differently: Your industry is “banned from working”. While the situation in the industry has improved significantly since the summer, experts are warning of serious damage to the catering and stationary retail trade.

There are two voices that show that there is a rift in the German economy. From this Monday, the tough restrictions on public life that the federal and state governments have decided in view of the increasing number of infections will take effect. Stricter contact conditions apply again for citizens. Gastronomy as well as leisure, cultural and sports facilities have to close. Hotels are no longer allowed to accommodate tourists. Retail, schools and daycare centers will remain open unlike in spring. The partial lockdown will initially apply until the end of November – and it could exacerbate the divide in the economy.

Restaurants, culture, events and tourism have not been able to fully recover even when the infection situation had subsided in summer. The new measures are now prolonging and deepening the crisis. “The sectors of social consumption currently have no chance of recovery,” says Michael Hüther, director of the employer-related Institute of the German Economy (IW).

Many restaurants and pubs in Germany were already under great pressure before the partial lockdown in November. According to a survey by the German Chamber of Commerce and Industry (DIHK), 42 percent of catering companies reported a bad business situation. In the overall economy, this was true for 29 percent. In the survey, 34 percent of the restaurateurs questioned said they suffered from liquidity bottlenecks. Equity fell in 55 percent of companies. Across all industries, liquidity is a problem for 19 percent of those surveyed, equity for 28 percent.

Consumers’ buying mood is waning

The question is also whether the closure of restaurants will also have an impact on the retail sector if fewer people go shopping in the city centers. The mobility data from Google already suggest that the inner cities have been emptier every week since the beginning of October. The buying mood of consumers is slipping, as the current HDE consumption barometer shows.

According to market researchers from Nuremberg GfK The crisis hits brick-and-mortar retail in particular, because consumers are unsettled due to the increasing number of infections and many tend to avoid going to shops. In addition, “shopping with a mask is only limited fun,” said GfK consumer expert Rolf Bürkl. Online retail in particular should benefit from the new restrictions on public life.

The situation in industry has been much better since the summer. “The manufacturing industry fought its way out of the recession surprisingly well – especially when you consider that there have always been restrictions in some country all along,” says IW boss Hüther.

The big difference compared to March: The borders within Europe are open. The truck toll index stands for smooth cross-border trade: It shows that as many trucks have been rolling through Germany since the summer as before Corona.

The end of the pandemic in China will give the auto industry a further boost. Germany’s model industry suffered from declining sales before the Corona, now the Chinese business is giving its new momentum. In German industry, you can therefore live rather well with the partial lockdown. Karl Haeusgen, President of the VDMA mechanical engineering association, said: “The measures that have now been decided are correct and necessary to break the wave of contagion. Preventing worse things is the right goal. “

BGA President Börner pointed out that the companies concerned would receive a loss of sales from the state. “This means that Germany has a unique selling point in Europe, perhaps even worldwide, that we are envied for,” he told Handelsblatt.

The movement of goods runs smoothly

He has no worries that Germany will take over financially. “It is now paying off that the federal government has kept the money together in good times and has implemented a solid budget policy,” said Börner. But he too is critical of the closure of all catering establishments: “I am convinced that the risk of infection in restaurants is very low if certain safety rules are observed there.”

At the beginning of the pandemic, industry suffered even more than consumption. During the lockdown in spring, the production of goods was never banned in Germany – but there were no pre-deliveries from China and, due to initial border closings, also from neighboring European countries. The supply chains were disrupted in many ways.

The movement of goods is now running smoothly again. The RWI Institute reported on Friday that there was a strong increase in throughput both in the Chinese ports and in ports outside of China. “This shows that world trade is continuing to expand vigorously,” says RWI economic chief Torsten Schmidt. Container throughput exceeded its pre-crisis level. Gabriel Felbermayr, President of the Kiel Institute, says: “We have no problems with supply chains, although other countries have long imposed restrictions.”

Most economists expect the upswing of the third quarter to continue in industry – as long as borders remain open and schools and daycare centers remain in operation. Before the second wave, the German gross domestic product (GDP) grew by 8.2 percent in the third quarter, faster than expected – after it had slumped more drastically than ever before in the post-war period with 9.8 percent in the second quarter. Corona is having an effect, however: GDP is still more than four percent below the previous year’s value.

The partial lockdown will definitely put a damper on the economy. Economists disagree as to whether the upswing in the third quarter ends with stagnation or a renewed downturn at the end of the year. According to Felbermayr, however, it is clear that a decline in GDP would no longer be as strong as in spring. Because the sectors that have to close in November only account for four percent of German economic output.

Billions in losses for the economy

According to calculations by the German Institute for Economic Research (DIW) for “Welt am Sonntag”, the measures will cost the economy around 19.3 billion euros in November. With losses of 5.8 billion euros, catering and hotels are hardest hit. The areas of sport, culture and entertainment would have to cope with a minus of 2.1 billion euros, the trade of 1.3 billion euros. The German industry must therefore reckon with a minus of 5.2 billion euros. A large part of the remaining sum is accounted for by corporate service providers, logistics companies and also cinema operators.

After parts of public life were shut down in November, the big question will be how Germany can get out of the tough measures without the virus spreading rapidly again. “It is important that the Christmas business does not suffer and that consumption does not collapse,” says IfW boss Felbermayr. Because then growth in the next year would also be jeopardized, for which the federal government expects a rate of 4.4 percent according to its new forecast from Friday.

BGA President Börner is betting that a vaccine will be available as early as the first quarter of next year. Then there will be a strong upswing, he predicts. “I am confident that we can return to business as usual in the second quarter. That means the subject is gone for now. ”However: The chairman of the Standing Vaccination Commission at the Robert Koch Institute (RKI), Thomas Mertens, expects that a comprehensive vaccination in Germany will take until 2022.

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