November shutdown could cost the German economy 19 billion euros – and numerous jobs. According to economists, the fight against the second corona wave will cost Germany dearly. Restaurateurs and hoteliers are compensated, but could again suffer particularly.
November shutdown could cost the German economy 19 billion euros – and numerous jobs
The German economy issued an urgent warning of the consequences of a second corona shutdown. It was of no use: The federal and state governments again issued massive closings and contact bans from Monday.
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According to calculations by economists, this one-month shutdown in some branches of the economy is likely to cause great damage. The shutdown will cost around 19.3 billion euros, the German Institute for Economic Research (DIW) determined. With losses of 5.8 billion euros, catering and hotels are hardest hit.
That would be a loss of 55 percent of the usual economic output in a quarter. However, many of the entrepreneurs affected will not have to cope with the decline in sales alone. Politicians are planning, perhaps also to prevent lawsuits, generous compensation. Up to 75 percent of the previous year’s sales should be offset – this is likely only a few landlords or hoteliers have achieved in the past few months.
More short-time work expected again
According to DIW, the areas of sport, culture and entertainment have to cope with a loss of 2.1 billion euros, and retailing 1.3 billion euros. According to the DIW, German industry must reckon with a loss of 5.2 billion euros. A large part of the remaining amount goes to corporate service providers, logistics companies and cinema operators.
The lockdown should also have an impact on the labor market. According to the DIW forecast, the number of employees will decrease by almost 100,000 in the current fourth quarter. The number of short-time workers will increase by 400,000 to 3.2 million by the end of the year. In 2021, the number of bankruptcies as well as the number of unemployed will increase. The latter is currently being mitigated by short-time working.