Fighting Covid-19: When everyone is healthy, the bad awakening comes

BThe Federal Government is only slowly moving towards loosening the corona regulations. Small shops will be allowed to open again next week and the schools for a limited number of students at the beginning of May.

But for the majority of the citizens affected by the shutdown, the federal-state agreement leaves open when they can return to a normal working day. The timetable back to normal – it doesn’t exist.

Millions of parents are now horrified to find that they will still have to take care of their toddlers and primary school children at home for the next few weeks. They often don’t know how to work on the side. Hoteliers, restaurant owners and many other service providers who are not allowed to start up their business again until further notice are also outraged.

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Chief Economist at Deutsche Bank

The future of travel agencies, trade fair organizers as well as sports and cultural activities is also completely in the fog. The agreement between the federal government and the federal states does not promise the end of tourist travel restrictions, and the ban on major events is even explicitly maintained until at least the end of August.

The government’s statement alone is clear that containing the Covid 19 epidemic remains an absolute priority. Politicians are silent about the consequences of this strict course. One wants to maintain the great acceptance of the population for the restrictions. There is no public debate about the pros and cons of the individual measures.

Economic livelihood breaks down

What do we have to realistically expect? If the motto “as few new infections as possible” is kept, parents should not expect any kindergarten openings until summer. It is impossible for educators to enforce the hygiene and distance rules that apply to toddlers in Corona times. And even smaller elementary school children won’t wear a face mask all day or keep friends at a distance.

The German Teachers’ Association also estimates that 25 percent of the teachers belong to the risk group and therefore cannot be used. The school year ends in some federal states in June; all other countries will follow in July. If the distance rules remained in place beyond May, homeschooling would be the consequence into the summer vacation. As a result, 4.2 million parents with children under the age of twelve are at risk of continuing stress testing.

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So far, according to the current “Germany trend”, 70 percent of the population feel that the restriction is not or only slightly stressful. However, catastrophe researcher Wolf Dombrowsky recently warned in the WELT interview: “The stress test takes place when people realize that their economic livelihood will break away in the corona crisis.”

It is precisely this finding that is likely to prevail among more and more entrepreneurs and employees in the next few weeks. Thanks to the government bailouts with short-time working allowances and quick liquidity support for companies and the self-employed, the federal government sent a strong signal to calm down quickly.

State funds only help for a short time

But the state’s firepower is also limited. Never before have so many companies been supported with their employees in one fell swoop. The metal and electrical industry alone, with around four million employees Germany’s most important key industry, has already registered short-time working for 83 percent of its employees or is planning to do so.

Unlike in the financial crisis in 2009, when the export business in particular collapsed, large parts of the service sector are also affected this time. And even the public service has agreed on regulations for the introduction of short-time work for the first time. This will soon mean that far more people than previously calculated by the government will have to make do with up to 40 percent less net income.

The automotive industry and mechanical engineering expect the production to be ramped up again very soon. However, a rapid recovery is uncertain given the deep global recession.

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Special rules in corona crisis

The situation is even more dramatic in numerous other economic sectors: Chancellor Angela Merkel’s strict course means that tourism, the mobility sector, the catering trade and event service providers must fear that the summer season will also be lost after the Easter business.

Government loans, the deferral of taxes and social security contributions and even grants can only keep companies that currently have little or no income above water for a limited time. For many companies, the question arises whether they are going to take on debts in the crisis or rather file for bankruptcy to limit the damage.

We need transparency

The same also applies to the self-employed, of whom 41 percent are already experiencing a slump in their business activities, according to the “Household Crisis Barometer” of the Leibnitz Institute for Financial Market Research SAFE.

There is also tremor in many medium-sized companies. A survey by the Association of Family Entrepreneurs among its members showed that a third could not survive two months. 67 percent of the companies experience business losses of almost 50 percent on average.

“Many of the companies already struggling for their livelihood will no longer be able to hold out until May,” warns the President of the family business, Reinhold von Eben-Worlée. With every additional day of shutdown, despite extensive aid, they would sink deeper into debt and then into bankruptcy – with serious consequences for customers and suppliers.

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After the shutdown ends

Whenever businesses go bankrupt, entire towns are often hit. It is particularly dramatic when entire regions live from industries that remain in a coma until further notice. A great depression threatens not only on the North and Baltic Seas if bathers are not allowed to come for many months. No state aid could compensate for these losses.

Hardly any politician dares to say that most people in Germany will be poorer after the Corona crisis. And the stricter the regulations, the more difficult it will be to quickly make up for the severe financial consequences. The population expects political transparency in these times: about medical and economic facts.



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