Just in time for the pre-Christmas business, Hamburg’s Jungfernstieg shines in new splendor after months of renovation. In addition to some cosmetic operations, vehicle traffic in one of Germany’s top-selling shopping streets was noticeably reduced. “We want to significantly increase the quality of stay in public open spaces,” says the red-green Senate. Senate, Chamber of Commerce and business people are now hoping for more customers in the city center who are keen to buy. Can that work in the face of Corona?
The numbers are initially looking better than was generally feared at the beginning of the pandemic. On Tuesday, the Federal Statistical Office in Wiesbaden published the final figures for the third quarter. Accordingly, the gross domestic product (GDP) rose by 8.5 percent from July to September. However, the GDP was still 4.0 percent lower than before Corona. In addition to the export business, private households in particular were responsible for the upswing. Their consumption temporarily fueled the economy in the summer.
However, fears of a renewed flare-up of the pandemic and a second lockdown have come true in November. Most economists now expect economic output to shrink again in the euro area. Against this background, the Council of Economic Experts sparked controversy with its annual report recently presented to the Federal Government. “While most of the world is worried, the Council of Economic Experts seems to be primarily concerned with the swift reversal of support measures,” criticizes Sebastian Dullien, director of the Institute for Macroeconomics and Business Cycle Research (IMK).
Dullien accuses the majority of the committee, which is also known as the economy, of wanting to return to black zero as quickly as possible. “The fundamental sensibility of the debt brake is not discussed, although the topic is gaining in political importance and should play a role in the coalition negotiations in the federal government in 2021.” The Council is therefore not up to date in theory either.
In view of the coronavirus consequences, the state again provided billions in aid in November. Not every measure is balanced. Some industries and especially smaller companies complain that they are benefiting too little from the measures. But the crisis is tearing huge holes in the state coffers. For the first time since the financial crisis in 2009, tax revenues are falling this year. Federal Finance Minister Olaf Scholz (SPD) wants to raise around 300 billion euros by the end of next year if necessary. Not planning any such new borrowing, according to Scholz, would be “irresponsible”.
Nevertheless, there is again a violent argument. The President of the Court of Auditors, Kay Scheller, recently strictly rejected the Finance Minister’s submission and demands for a reform of the debt brake. “The debt brake has proven itself” – generations of grandchildren are not allowed to pay the interest on our debts. Critics oppose this: Only debt enables investments for a fair future for our grandchildren.
Meanwhile, the shopping mood is limited. According to the trade association, sales in clothing and leather goods in particular are far behind, and the Christmas season can hardly make up for the minus. The Ifo business climate fell significantly across Germany in November. Corona and the lockdown are taking their toll. However, the signals are different. The KfW business cycle compass is fueling hopes of a strong economic recovery – after a difficult winter.
The starting conditions seem quite favorable. Due to the numerous support measures taken by the state, the number of employees fell by only 1.4 percent. The disposable income of private households is even 0.7 percent above the previous year’s figure – so business people don’t really need to worry about private consumption. The German export industry is also hoping. Important customer countries in Asia fought the pandemic far more successfully than Germany. Global maritime traffic is heading for an all-time high again. The shops on Jungfernstieg could also benefit indirectly from this. “The turnaround in cargo handling is emerging,” is the saying from the port of Hamburg.