Economists argue about stimulus programs

Berlin Scrappage bonus? VAT cut? Negative tax for companies? When the coalition committee draws up an interim assessment of the consequences of the economic standstill on Wednesday evening and provides advice on possible new aid for small and medium-sized businesses, the leaders of the Union and the SPD also want to include advice from economists. However, almost all of the proposals for an economic stimulus package to boost consumption are controversial among economists.

It starts with the question whether, in addition to the rescue aid that has already come into force, the economy needs a medium-term economic stimulus program to get it back on its feet. Yes, say Clemens Fuest, President of the Ifo Institute, and Marcel Fratzscher, President of the German Institute for Economic Research (DIW). “It is not enough just to avoid bankruptcies and unemployment,” said Fratzscher.

No, says Gabriel Felbermayr, President of the Kiel Institute for Economic Research (IfW). “Economic stimulus programs are pointless as long as economic activity is paralyzed by preventing social contacts,” he says. The government must now provide a credible, resilient plan to exit the lockdown. Veronika Grimm is more cautious about saying no to promoting consumption. It requires targeted modernization investments in digitization and climate protection.

Employees of Fratzschers DIW and Felbermayrs IfW even had a day-long Twitter exchange of blows about the need for economic support. After the leading economic research institutes, which included the DIW, the IfW and the Ifo, delivered their joint forecast to Economics Minister Peter Altmaier (CDU) last week, the DIW complained that his recommendations for an economic stimulus program had been kept outside by the other institutes .

More short-time work allowance? Broad tax cuts? “We don’t need all of that,” says Felbermayr. He is convinced: “If the companies’ equity base remains successful, then after the crisis they can continue where they had to stop because of the crisis.”


Marcel Fratzscher is President of the German Institute for Economic Research.

(Photo: imago / IPON)

He does not consider it necessary to strengthen purchasing power. “We save more than usual because we can consume less. The money is available for consumption as soon as the lockdown ends, ”he says.

In contrast, Fratzscher and Fuest are convinced that the crisis is so deep that the state must support the economy. Short-time work, for example, is associated with a loss of income. However, Fuest warns: “The state should use the money very specifically for additional measures”, after all, the national debt is already increasing rapidly.

With the short-time work allowance, for example, which Federal Labor Minister Hubertus Heil (SPD) wants to increase for everyone, Fuest suggests increasing it only for those who would otherwise fall under the social assistance limit. As with the solo self-employed, this could be done without a wealth check, says Fuest.

In the Union too, it was said, an increase can only be imagined for lower income groups. There are also voices from the CDU and CSU that have not yet decided on new aid programs, but want to monitor developments for two to three weeks.


Fratzscher, in turn, wants to strengthen purchasing power through temporarily lower social contributions. That would also help employers. “Broad income tax cuts would now be of little use because they are more likely to help people with higher incomes,” said Fratzscher.

It is undisputed that the economy is suffering enormously from the contact bans imposed in mid-March. The figures that the Ministry of Economic Affairs had prepared for the coalition committee and which are available to the Handelsblatt describe a catastrophic situation.

By April 13, 725,000 companies had registered with the Federal Employment Agency for short-time work. The applications already examined concerned over one million employees. 13,000 companies have applied for liquidity aid from KfW amounting to 26 billion euros.

And 1.1 million small businesses were granted grants of nine billion euros. According to data from the HDE retail association, 70,000 hotels and restaurants are facing bankruptcy. In a lightning survey by KfW on the start-up platform, 90 percent of the self-employed indicated a drop in sales. “We are currently experiencing a massive economic downturn,” says Fuest.

Purchase premium in the criticism

The purchase premium demanded by the auto industry is particularly bad for the economists surveyed by the Handelsblatt. Fuest advises the government to consider what the 2009 scrappage bonus actually did before making a decision.

In no case does he want to see the bonus linked to the scrapping of old cars. Fratzscher thinks that a scrappage bonus could be an incentive to buy a car; but it must promote new drives. “If you can’t do this, the state should invest in charging stations instead of subsidizing the status quo,” he said.

The Veronika Grimm economy considers “a scrapping premium to be the wrong instrument”. It would “potentially bring hundreds of thousands of new petrol engines to the fleet and delay the transformation towards climate-friendly mobility,” she said.

The population is also against the premium, as a representative survey by the polling institute Civey shows, which is available to the Handelsblatt: 62 percent answer the question “Should the federal government support the purchase of new cars with a scrapping premium for old vehicles as a result of the corona pandemic?” “No, definitely not” and “rather no”.

It is better, says Grimm, that the state should invest money in the expansion of IT networks and in schools. This is all the more important since children from educationally disadvantaged classes would now suffer new disadvantages due to the school closings.


Fuest also relies on targeted investments: “IT specialists are now available, so it would be the right time to reduce the IT backlog in administration,” he said. The digital skills of workers should also be trained. There was time for this during short-time work. “We now have free construction capacities that did not exist before Corona,” said Fuest, who therefore advises that public construction investments be preferred.

Fratzscher also demands the promotion of the domestic economy. “It will not work for Germany to export itself out of the crisis,” he said. Economic growth in key customer countries, such as China and the USA, is too weak for this.

Even the proposal to lower VAT is not well received by economists. On the one hand, with loss of revenue of twelve billion euros per percentage point, this is particularly expensive for the state treasury. Fratzscher also doubts that the relief would be passed on to customers. “It would therefore be a subsidy to companies that would not increase demand,” he said.

Fuest is also skeptical about a VAT cut that several prime ministers want for restaurants. “If you choose to do it, it would only be temporary,” he said. “But then later you would have the problem of getting out of this exception,” he fears.

Compensation for lost profits?

There is, however, one way that economists would go together: relief for companies that profit taxes do not have to be paid this year, but are postponed to other years through generous tax advances and tax returns. The companies would then come out of the corona crisis with significantly less debt.


Gabriel Felbermayr has been President of the Institute for the World Economy since March 2019.

(Photo: ifw-kiel)

This was suggested by the former economist Peter Bofinger. Immediate depreciation for investments is also widely supported. Felbermayr also thinks this makes sense. He also advocates a “negative tax”, where companies would be reimbursed for profits based on profit taxes for 2019 for 2020 – repayable from 2021.

Michael Hüther, head of the employers’ institute of the German economy (IW), had also asked for a negative tax. Fuest can also envisage government grants that would have to be repaid if profits flow again.

Bofinger even thinks that the companies could demand compensation from the state for their lockdown-related loss of profits. “You shouldn’t treat them like supplicants,” he said. “Hotels, for example, cannot help that they cannot do business.” The corona crisis is completely different from the financial crisis that bank managers caused.

“If the regulatory principle applies that responsibility and liability go hand in hand, then companies should get money from the state,” he says. Like the farmers after the tsunami: “The state did not take part in the farms in return,” said Bofinger.

More: Different sectors are affected to different degrees by the corona crisis. The state should therefore rely on industry-specific solutions to boost the economy again, says Handelsblatt editor-in-chief Sven Afhüppe.


Germany lacks uniform ways out of the crisis

Berlin Nils Ismer’s tigers, dromedaries and flamingos spend quiet weeks. Ismer heads the Ströhen zoo, a family-run company in the Lower Saxony district of Diepholz. 700 animals from five continents live on the land of a former farm. 70,000 visitors come every year, and the spring season actually begins. But the zoo is closed because of Corona.

When the federal and state governments agreed last week in which areas public life could gradually be ramped up, zoos were also on the list. In some federal states, zoos have reopened since Monday. Not in Lower Saxony. Ismer says: “You have to be arbitrary if animal parks in Schleswig-Holstein or Mecklenburg-Western Pomerania are allowed to open again, but we can’t.”

A safari park in North Rhine-Westphalia was able to open at the end of last week because the visitors were in cars there. “This is a distortion of competition,” complains Ismer. The veterinarian is now urging the Lüneburg Higher Administrative Court to close his zoo.

How much new normality is possible in the corona crisis and at what pace the measures are loosened depends very much on where in the republic the citizens live and the companies are based. Chancellor Angela Merkel (CDU) and the prime ministers always emphasized that the aim was to act uniformly if the most drastic restrictions on everyday life in the history of the Federal Republic were relaxed.

But the impression arises that every federal state does what it wants. Some countries were already rushing when society and the economy were shutting down, and the rules were not uniform even during the lockdown.

Relaxation leads to “opening discussion orgies”

And the exit strategy from the Corona standstill also seems cobbled together. Most of the shops in Bavaria will remain closed for the time being, while shopping malls will open in Bremen. Lower Saxony closes the zoos, Rhineland-Palatinate allows party events.

The final classes are returning to Saxony’s schools; elsewhere, classes only start gradually in a week or two. Some countries, including Mecklenburg-Western Pomerania and Bavaria, make mouth-nose protection mandatory in certain public spaces.

The state government of North Rhine-Westphalia rejects an obligation; Münster, on the other hand, requires wearing masks as the first city in North Rhine-Westphalia. The municipalities also have a say in how everyday life should look in the pandemic.

Merkel goes a few steps too far for the state governments. At a switching conference of the CDU presidium on Monday, she complained that the message of cautious easing in some countries had led to “opening discussions”.

In a press conference, she later warned against risking a relapse in the crisis with premature loosening of the “seeing eye”. “We have to remain vigilant and disciplined.” The extent and pace of the openings do not seem to be a question of infection control, however, but depend heavily on the political moods of different state governments.

Downtown Ulm

Many stores are allowed to reopen in Germany.

(Photo: dpa)

Square mess in retail

Areas can be calculated precisely in mathematics. In politics, units of measurement are more flexible. The federal and state governments basically stipulated that shops with a sales area of ​​up to 800 square meters may reopen – provided they comply with protection and hygiene standards.

While Bavaria wants to strictly adhere to the upper limit, larger stores are allowed to open in several federal states if they reduce their space, for example by partition walls. Bookstores, car dealerships and the bicycle trade, in turn, can open regardless of the size of their retail space.

Some states, such as Rhineland-Palatinate and Bremen, are also unlocking the shopping centers. The area restriction then only applies to the individual shops. In North Rhine-Westphalia, baby specialty stores and furniture stores are allowed to open again, but no electronics retailers. What exactly counts as a “furniture store” is unclear. In Lower Saxony, on the other hand, the electronics markets are open again.

The time of opening also varies. The retail trade opened business on Monday in Hesse, North Rhine-Westphalia and Saarland, among others. In Brandenburg this is only possible from Wednesday.

The Senate in Berlin takes its first decisions on Tuesday; in the capital, however, book and bicycle stores had already been closed. In Bavaria, the retailers have to be patient for a week, after all, access to DIY superstores and garden centers is allowed again. They were open all the time in a number of countries.

The trade is happy to be able to get started again. “Opening stores up to 800 square meters is a step in the right direction,” said Stefan Genth, chief executive of the German Trade Association (HDE). “But this limit also means that many frequency providers in the city centers are still closed.” That continues to threaten the existence of many companies.

Patchwork at schools

The countries also proceed differently when they return to school. Berlin and Brandenburg started the Abitur exams on Monday, Schleswig-Holstein followed on Tuesday. In North Rhine-Westphalia, students return from final classes at secondary schools, special schools and vocational colleges on Thursday, and prospective high school graduates can then attend school before the exams on May 12 – voluntarily.

From April 27, Bavaria plans to resume exam preparation for final classes. Graduated according to age groups, it will then continue from May 11th. It is similar in all federal states that there will be no normal classes for the time being, even if the schools are gradually reopening.

Baden-Württemberg announced that classes will start on May 4th with a very limited start. By the end of April, the culture ministers of the federal states are to develop a concept for hygiene measures, school bus operation, break times and class division.


How the corona crisis will continue for the parents of around 3.7 million day care children in Germany is currently completely unclear. Since March 16, daycare centers have only offered emergency care for children whose parents work in systemically relevant professions, such as nursing and medical care.

A unified path for the around 56,000 day care centers in Germany is unlikely. The “AG-Kita” of the states, chaired by Brandenburg and North Rhine-Westphalia, is working with the Federal Ministry of Family Affairs on a concept for the period after May 3, but it only contains “guidelines and recommendations”. In plain language: countries, municipalities and sponsors ultimately decide themselves.

Race for “systemic relevance”

The federal government itself is causing chaos with unclear requirements for the federal states. For example, a lobby race has broken out among associations in recent weeks to declare their own sector to be systemically important – a race that has partially drifted into the absurd. The trigger was the statement by Agriculture Minister Julia Klöckner (CDU) that agriculture was “systemically important”, especially in the corona crisis.

Such recommendations of the Federal Government are of course “non-binding”, as the Ministry now admits in a response to a request from the Green MP Danyal Bayaz, which is available to the Handelsblatt. The respective state authorities are responsible.

However, according to Klöckner’s statement, many associations were still afraid that they might not be relevant to the system and thus suffer disadvantages. Accordingly, individual companies and associations put pressure on their state governments – some lobby organizations even declared themselves systemically relevant.

Association insiders report that the powerful association of the Bavarian economy (vbw) has certified companies in series that they are systemically relevant so that they can continue to do business with their suppliers in northern Italy.

A business association cannot certify this at all. But in Italy you obviously just want to see some stamp. “A complete confusion has arisen,” complains a high-ranking representative of the association.

Legal certainty is lacking

A few weeks ago, associations had therefore urged Economics Minister Peter Altmaier (CDU) to ensure legal certainty, but this did not happen. The Greens politician Bayaz says: “It does not help if individual ministries, federal states or associations declare their favorite industries to be systemically relevant.” This requires “clear and transparent, especially nationwide, uniform criteria”.

So far, however, this has not existed. And companies are already dealing with the next annoyance: the federal quarantine model regulation, which the federal states implement differently. If a craftsman from Bavaria goes to France on assembly, he must then be quarantined for 14 days if he has been there for more than two days. NRW handles the rule much more loosely: a fitter only has to stay at home for two weeks if he has been abroad in the EU for more than five days.

This causes uncertainty for companies, and especially for those with locations in different federal states, a considerable effort. “We have had very high levels of acceptance of day-to-day restrictions among companies and customers,” said Ludwig Veltmann, general manager of the SME association, Handelsblatt. “This acceptance is at risk if the measures with regard to health protection are not comprehensible.”

In a letter to the heads of government of the federal states, the association of small and medium-sized enterprises, which represents companies from trade, craft and the service sector in particular, warns of a “patchwork of different regulations”.

As a result, the economy was faced with additional burdens: “For companies with multiple locations in different municipalities or even federal states, it is an enormous and, under the current circumstances, unreasonable challenge to quickly adapt to a multitude of different requirements.”

More: Germany will only survive this corona crisis if the rest of the European Union can do it. National self-praise leads past the problem.


Despite easing, the crisis is not over for the trade

Berlin Even if the first retail companies are allowed to reopen this Monday, the corona crisis has not ended for the industry. Commerce and real estate industry renewed their criticism of the different approaches of the federal states. Chancellor Angela Merkel (CDU), on the other hand, warned against an “opening discussion orgy” in a meeting of the CDU presidium on Monday.

“Opening stores up to 800 square meters is a step in the right direction,” said Stefan Genth, chief executive of the Handelsverband Deutschland (HDE), the Handelsblatt newspaper. “But this limit also means that many frequency providers in the city centers are still closed.” That continues to threaten the existence of many companies.

The federal and state governments had agreed last week that after five weeks of closure, smaller shops should be able to reopen this Monday. The handling is very different.

In Hesse, North Rhine-Westphalia, Hamburg and Saarland, among others, citizens can once again shop in shops with a sales area of ​​up to 800 square meters.

The shops are also opening in some eastern German states – such as Saxony-Anhalt and Mecklenburg-Western Pomerania. In Berlin, on the other hand, the Senate does not want to take its first decisions until Tuesday.

Controversial size question

“Last but not least, the technically unoccupied number of 800 square meters for the trade, but also the different handling of product ranges clearly raised questions,” said Andreas Mattner, President of the Central Real Estate Committee (ZIA), umbrella organization of the real estate industry, on Monday.

There is still controversy as to whether the rule on the size of shops also applies to shopping centers in general and they have to remain closed – or whether smaller shops can also open there.

“The cost pressure on dealers is increasing,” warned Genth. For most of the shops that are now reopening, the following applies: “100 percent costs with subdued sales expectations.” Therefore, landlords should approach their tenants in order to agree on good terms by the end of the year.

In many cases, it may still be appropriate to reduce rental costs to 50 percent until sales have returned to normal. “Otherwise, the big wave of bankruptcy threatens after the end of the closure phase.”

The imperative of the hour is to maintain the occupancy rate. “The tenant you lose is not so easy to replace in three months. It can be the economically better option to support the tenant, ”said Genth.

Real estate industry demands a commission

The umbrella organization for the real estate industry called for the setting up of an advisory committee to advise on how retail can resume operations. In addition to virologists and representatives of the Federal Government’s Council of Experts, this association should also include associations that focus on the areas of commercial and commercial real estate.

“This commission could deal with the much criticized rule for opening shops only up to 800 square meters and the still very different handling of ranges and distance regulations for visitors,” said Mattner.

In addition to this, ZIA President Mattner called for temporary tax framework conditions to be created for stationary retail, which would ensure that the retailers had much-needed liquidity. In addition to the tax deferrals that are currently possible, stationary retailers could be temporarily exempted from part of the additional VAT payment, ”said a statement on Monday.

Sales tax paid by the customers on the income would thus remain in the economic result for the dealers. “This would give retailers more liquidity to ensure their economic survival and thus jobs and diversity in city centers.

The burden on trade tax could also be reduced. Currently, spending on “rent and lease interest” has increased the tax base for trade tax. “If this assessment factor were not added,” says the association’s statement, “the rental retailer would be relieved of economic burden as a result of lower trade tax.”

More: The call for state aid does not stop. The real estate industry is particularly demanding support for three sectors – but not only in the form of emergency aid.


Opportunities for traders in the corona crisis

Munich Long lines in the discounters, crowds in front of the drugstores – and yawning emptiness in all other shops in this country. The corona pandemic is a disaster for many retailers in this country. The trade association HDE is already raising the alarm that its consumption barometer has dropped to its lowest level since the start of the surveys in October 2016, the industry association announced shortly before Easter.

But that’s not all: the outlook is bleak. Even in the coming months, a significant decline in purchases can be expected, the crisis has reached consumers: “Many companies have closed or are stopping production, more and more employees are already on short-time work or will be in the coming weeks, the number of unemployed is increasing. “

However, there is no reason for traders to resign. There are opportunities to do business even in times of crisis. Here are seven approaches:

1. Daily contact with customers

The 150 branches are closed, but the bookstore chain Hugendubel does not want to lose contact with customers. And so the Munich-based family business sends emails with reading tips to its customers several times a week. Consumers can order the titles in the online shop. But that’s not all: The Munich company with its 1700 employees entertains the buyers: “We approached many authors to organize their readings live from Instagram from home,” says owner Nina Hugendubel. The readings are actually there to liven up the branches. Now they are used more to initiate business in the internet store.

“A newsletter is an enormously effective tool for establishing a personal relationship with customers and keeping them long-term,” says Christian Rechmann, managing director of the Munich agency For Sale. These days, newsletters could contain essential information for customers. For example, that DIY stores that individual federal states had to close to the public are still open to professionals. This would preserve at least part of the business.

2. Coupons for better times

For Martin Kerner from the outdoor store base camp, vouchers are a blessing. The Karlsruhe merchant asked his 24,000 regular customers online to support him in the crisis. Customers also do this with orders placed online and by buying vouchers. “Doesn’t save normal sales, but is more than a drop in the bucket,” says the boss of more than 40 employees.

Vouchers are now supposed to flush money into the till to get through the tough weeks of exit restrictions. Clever dealers would promise their customers a “small thank-you discount” in the shop with the vouchers, agency boss Rechmann recommends. “This allows customers to show solidarity with their favorite shops and also be happy that they shot a bargain right away.”

Hugendubel also offers vouchers for Easter that can be sent to loved ones by email. And if you still needed a game for the holidays: In the week before Good Friday there was the starter pack of the modern Gravitrax marble run from Ravensburger with a 40 percent discount.

In addition to the dealers, the restaurateurs are also hard hit. There is also a solution for them: The “Paynoweatlater” initiative enables vouchers for restaurants, bars and cafés to be purchased online all over the country.

3. Local initiatives

In many cities, retailers have come together to still sell their goods., for example, emerged from a Munich initiative by city center retailers who wanted to give local manufacturers a shop window. The association is now trying to act as an Internet portal to draw customers ‘attention to retailers’ online shops.

“Einzelheld” is similar, an initiative by two software companies from Stuttgart who want to offer regional retailers a platform on the net to offer their goods outside of their business. There are also delivery services in numerous other cities organized by local authorities or groups of dealers.

4. Virtual advice

Check it out, try it on, pack it up: that’s normally how it works in the Schöffel Lowa stores. The two Bavarian outdoor brands have invested in joint stores across the country in order to get closer to customers. Of course, that doesn’t work at the moment. That is why consumers are now being advised by telephone. If you order, the nearest shop will send you the new hiking boots or rain jacket. And not only that: from a purchase of 100 euros, there is a 15 euro discount.
Accessible via all channels, but not face to face: that is Tobias Schonebeck’s motto. The boss of the traditional Schäffer department store in Osnabrück is there for customers by phone, has his people answer e-mails and of course accepts orders in the web shop.

With outstanding success: In the days before Easter, sales had almost reached the normal level. That is certainly also due to the fact that Schonebeck delivers the goods in the region every day. Other retailers also offer online chats with consumers, giving them a feeling of being close to the people.

5. Awaken longing

No travel, no trips, no change: people in Europe have to stay at home. Many retailers and manufacturers have therefore started to arouse people’s longing for their products with beautiful pictures – or with useful tips. This can be done via Instagram, where products can also be sold directly. Or about films on the Internet.

Alpine brand Salewa, for example, is showing a streak of two-time bouldering world champion Anna Stöhr on YouTube from next week. Like Salewa, the Bavarian Bergzeit outdoor shop is part of the South Tyrolean family company Oberalp. Bergzeit explains online how climbers can train at home and offers yoga exercises for mountain athletes.

“Service providers in particular, but not just such providers, can often also help customers digitally with their offers,” says agency boss Rechmann. “Be it the online yoga class, digital learning or an original recipe for cooking and cooking. They share their knowledge and stay in touch with customers. “

6. Sell online – even without your own internet shop

If you still have to do without your own internet store, you will hardly be able to build it during the crisis. But there are alternatives for traders. The start-up Sportmarken24, for example, enables stationary sports retailers to offer their goods on the large internet marketplaces. The small company collects a fee for this, but saves the merchants from investing in their own online shop.

The online marketplace Ebay offers special advice for stationary retailers these days, waives sales commissions in the next few weeks and wants to enable merchants to enter the Internet business. The Internet fashion retailer Zalando also tries to attract shopkeepers to their own platform. “Connected Retail” is the name of the program that is intended to make it as easy as possible for merchants to use Zalando as a digital store.

Special conditions apply until the end of May: “We completely waive our commission and pay the sales to partners on a weekly basis,” says Zalando manager Carsten Keller. Shops could easily connect their inventory. Zalando takes care of the online content, payment processing, customer care and supports the partners with a personal contact.

Some brands have closely integrated their retailers into online sales. For example, consumers can shop directly from the bike bag manufacturer Ortlieb in their web shop. The Franconian producer strikes a local dealer. It is the same with the fashion retailer Funky Staff: “All end-user orders always go directly to our retailers,” says CEO Uwe Bernecker.

7. Smart advertising

In times of crisis, many companies stop advertising to save. If you advertise smartly, you can stand out. An example of this is Schöffel. The sports brand has quickly converted its advertising slogan “I’m out” into “I stay in”.

Or the Intersport dealer association, which uses “Buy Online = Buy Local” to reach consumers on social media and thus establish a relationship with local shop owners. This could pay off, says advertising expert Rechmann: “Advertising that deals with the current Corona topic is even perceived extremely positively.”

More: How sports brands try to save their dealers.


Corona speeds up the death of inner cities

Dusseldorf Mark Rauschen is concerned. “Around six million visitors come to our fashion and sports house every year,” says the managing partner of L&T in Osnabrück.

But the attraction in the city of Osnabrück is closed because of the corona crisis. “It is currently spooky in the city center,” Rauschen describes the consequences of the state-prescribed shutdown for the city in northern Germany.

It could look similar in many German cities after the end of the corona crisis. Because experts assume that many retailers will not be able to cope with the week-long closure of their shops.

In addition, since many restaurateurs are threatened with the end, there is a risk that the vacancy rate in many city centers will accelerate and that they will become less attractive. The bitter consequence: fewer visitors come to the centers.

“In order to maintain the attractiveness of city centers, a functioning fashion trade is very important,” says Klaus Harnack, partner of the management consultancy Hachmeister + Partner. “This also benefits other sectors that are important for the vitality of cities, such as gastronomy,” emphasizes the consultant.

Bankruptcy wave is expected

But this colorful mix of fashion and other shops and restaurants could change dramatically in the next few months. “At the end of the year at the latest, there will be an unprecedented wave of retail bankruptcies,” says Harnack. He worries that about a third of the companies will not survive the consequences of the corona crisis.

For years, fewer and fewer people have been coming to the cities to shop. In the past five years alone, the number of stores in German retail has declined by around 29,000, according to the Handelsverband Deutschland (HDE).

“Every fifth company in Germany could go bankrupt”

This is due to the growing online business, but also to the fact that the inner cities are becoming more and more the same, because the same chain stores are everywhere esprit about HM to Zara shape the picture – and give up smaller retailers.

In addition, even large corporations such as Galeria Karstadt Kaufhof are at risk. Germany’s largest department store group recently registered a protective shield procedure. The retail giant wants to protect itself from creditors’ claims in the corona crisis.

Difficult times for landlords

This not only affects the big German cities. “The smaller the locations, the more difficult it becomes,” says Eckhard Brockhoff. The entrepreneur from Essen sees himself as the largest regional commercial broker in Germany. Many medium-sized towns had already struggled in recent years. But now the situation is even more explosive.

The broker sees hard times especially for some landlords. Some will lose their tenants because they have to file for bankruptcy. Others are trying to suspend the rent in the coming months with reference to the corona crisis. It may well be that many retail chains wanted to permanently lower their rents afterwards, says Brockhoff.

In the past few years, retailing in city centers had been increasingly replaced by restaurants and takeaways. “Food is the new shopping” is the motto of many neighborhood developers, observes Michael Lidl, partner of the hotel and catering consultancy Treugast.

However, Corona could also partially break off urban catering. The risk of the gastronomic landscape becoming deserted already existed before the crisis. But “such a process is accelerated by the corona crisis,” says Lidl.

Hermann Weiffenbach, the founder of the Enchilada Group from Munich, agrees with this opinion. The entrepreneur and franchisor for around 90 restaurants nationwide fears: “We will experience an insolvency wave in the catering trade. It will hit the small restaurateurs in particular, who generally have no reserves. ”

Fashion brands fear for retailers

International chains could last longer financially. A variety of restaurants, ice cream parlors and cafés are just as important for lively city centers as a wide range of retail outlets.

In order to prevent the store from dying, many companies in the fashion industry have now joined forces. This includes Mark Bezner from the shirt manufacturer Olymp as well as the bosses of the men’s fashion brand Brax and Michael Hirmer, managing partner of the Munich textile house of the same name.

“The overriding goal is to maintain vital inner cities in Germany with an almost unique mix of retail, catering and cultural institutions,” write the authors of a thesis paper, which also includes large associations such as the Federal Association of German Textile Retailers.

Given the expected losses this year and next, loans would not be enough to avert an unprecedented wave of bankruptcies. Retailers and manufacturers would be hit existentially and there would be a devastating domino effect. So it is about the preservation of 440,000 jobs in retail alone with clothing, sports articles, shoes and leather goods.

Austria as a role model

The fashion companies are demanding compensation for the pecuniary damage they suffered as a result of the closure of the shops due to the corona crisis. They refer to the Austrian model.

There, for example, initially granted loans can be converted into grants. In addition, grants can be paid regardless of previously granted loans.

Because according to calculations by Hachmeister + Partner, it can be assumed that the retail sector will only slowly recover after the stores have opened. Depending on the scenario, the drop in sales in May will be up to 50 percent compared to the previous year.

Handelsblatt Morning Briefing - Corona Spezial

A drop of 40 to 50 and 30 to 40 percent is also expected in June and July. Therefore, the dealers could hardly pay rent, personnel and energy costs.

Above all, companies have to prepare for the reopening of the stores. “We are preparing to prepare enough disinfectants, masks and plexiglass panes to protect against spills at the cash registers,” explains Mark Rauschen, head of L&T in Osnabrück, about the huge changes that the corona epidemic will bring to the retail trade.

“We will not experience the ease of shopping in the past,” feared Rauschen. It will take some time before as many visitors as before the crisis will make a pilgrimage to the house with the surf pool.

More: More and more chain stores no longer pay rent.


HRI consumption barometer: consumer sentiment drops to record low

Dusseldorf In the worst recession in German post-war history in the winter of 2008/09, private consumption still proved to be a stabilizing factor. But what the German economy is experiencing right now is putting everything previously known in the economy in the shade.

Because the massive restrictions in everyday life that the government has put in place to curb the corona pandemic not only put pressure on overall economic production, they obviously also have a massive impact on private consumption.

This is signaled by the HDE consumption barometer for April, which fell 3.25 points compared to the previous month to now 96.66 points. For comparison: The biggest drop in a month so far was not even half as big at 1.45 points in September 2018.

The barometer has been calculated monthly by the Handelsblatt Research Institute for the HDE trade association since the beginning of 2017. It is based on a representative survey of consumers. It shows the current consumer mood, which will be reflected in private consumption over the next three months.

In the past few days, various economic researchers have outbid themselves with pessimistic forecasts. Federal Minister of Economics Peter Altmaier (CDU) admitted on Thursday that the cuts should be “at least as strong as in the financial year as a whole during the financial crisis” – in 2009 the German economy shrank by 5.7 percent. “We assume that in individual months in the first half of the year economic growth can drop by more than eight percent,” said Altmaier. “After ten years of economic growth, we will have a recession again this year. But this recession has to remain temporary. “

Hope to compensate for the loss of income

Conversely, consumers do not see a rapid recovery – on the contrary. Their economic expectations fell by 16 points in April, as a partial evaluation of the HDE barometer shows. The decline in individual income expectations and the propensity to buy was also noticeable, but significantly less. The majority of consumers apparently assume that they themselves will not be affected as much by the overall economic slump.

On the one hand, this could result from the fact that disposable income, for example from civil servants, pensioners and other transfer recipients, will not be affected in the short term by a recession.

In addition, many employees in the private sector can hope that the state will compensate for a large part of their loss of income, for example with short-time work benefits. In addition – as is quite common in crises – consumers’ propensity to save, short-term loss of income, apparently consumers want to compensate by releasing reserves or low savings rates.

Short-term winner of the corona shock is likely to be the food retail trade in addition to the mail order business. According to the latest data available for February, all retail sales were 6.4 percent in real terms than in the same month of the previous year. Sales of food, beverages and tobacco actually rose by 7.8 percent in real terms.
The outlook for the service sector, however, is bleak.

The seasonally adjusted IHS Markit Service Index for service providers’ business, released on Friday, dropped to 31.7 points in March after having reached 52.5 points in February, well above the growth threshold of 50 points.

The situation may worsen

This decline marked the sharpest slump since the survey was launched in June 1997. The previous record low of 41.3 points came from February 2009. Markit expert Phil Smith calls it “unprecedented”.

Nevertheless, the German economy generally appears to be somewhat more resilient than other large countries in the euro zone due to its low dependence on travel and tourism and consumer-related services.

The service index in Italy dropped to 17.4 points. But perhaps this is just a “foretaste of what the other countries will face as a result of increasing business closures and curfews and tighter controls,” warned Markit.

More: This is how the corona crisis affects trade, industry and commerce.


How the federal government wants to save companies

Berlin It was an unusual Bundestag session on Wednesday morning. Only every third chair was allowed to be occupied by parliamentarians. The spaces in between had to remain free. President of the Bundestag Wolfgang Schäuble (CDU) asked the MPs to keep the necessary distance of 1.50 meters in the corona crisis in order not to infect anyone. “If there is not enough space in the hall, we have also created space in the visitors’ gallery.”

As many MPs as possible had traveled to Berlin for the meeting to ensure that the chancellor majority needed to adopt the crisis measures. However, the Bundestag stipulated for the future to be quorate even if only a quarter of the members are still present. “Parliamentary democracy will not be overridden,” said Schäuble. Parliament remains able to act.

It immediately demonstrated its ability to act. In the afternoon, the Bundestag hastily passed the billion dollar rescue packages for the economy. The Federal Council still has to agree on Friday.

“Hard weeks are ahead of us. We can cope with them if we show solidarity, ”Vice Chancellor Olaf Scholz (SPD) had previously advertised for the aid packages. Scholz spoke on behalf of Chancellor Angela Merkel, who is still in quarantine at home.

The measures would result in a supplementary budget of 156 billion euros – “a gigantic sum,” said Scholz. But this is necessary to mitigate the consequences of the crisis. In total, including sureties and discounted KfW loans, it is even about aid measures with a volume of 1.2 trillion euros.

Despite this huge sum, artisans, retailers and restaurateurs fear falling through the grate. Emergency aid is available for small companies with up to ten employees, and a new rescue fund (WSF) for large companies, which also grants direct grants as a supplement to KfW liquidity aid – provided the companies have at least 249 employees, 43 million euros in total assets and 50 million euros in sales .

Employer President Ingo Kramer praised the decisions: “What has now been launched is a huge and very targeted aid package,” he told the Handelsblatt.

The rescue package must also be accessible to companies, the associations of hotels, restaurants and caterers, Dehoga and IHA, the retail association HDE and the craft association ZDH demanded.

Fear of overwhelming the rescue package

“Many medium-sized companies with more than ten employees are at risk of falling through the network of federal support measures,” feared craft president Hans Peter Wollseifer. These companies also needed emergency aid, for example when pending wages or subsidizing rents.
Finance minister Scholz promised in the Bundestag that the government would do everything to mitigate the corona consequences. “There is no script for this.” If necessary, the government will decide on further measures. In concrete terms, Scholz already promised employers that he would have examinations made to make tax-free wages that they want to pay their employees in the crisis. That was what medium-sized companies had asked for.


In the Bundestag, however, other criticisms were initially in focus on Wednesday. A number of MPs were upset with the federal government. Around 15,000 companies are said to be able to slip under the rescue fund.

Union economic leaders fear that this large number could overwhelm the bailout fund – and lead to arbitrary decisions. Therefore, they particularly urged changes to the possibility of the rescue fund to nationalize companies in need. They demanded that the hurdles be raised so that the instrument could not be used indiscriminately.

However, the Ministry of Finance rejected all proposed changes. At 0.08 a.m. Tuesday night the house sent a large package with numerous changes to the law. “That is not possible, not even in these times,” said a CDU MP. “How are we supposed to go through the paperwork until the next morning’s resolution when we get it at midnight?”

Lambrecht for nationalization if necessary

The Federal Ministry of Finance is against criticism. “We have taken up many requests for changes, such as the desire of the federal states to put federal and state programs legally on an equal footing, or to include start-ups in the rescue package,” said the Ministry of Finance. However, one cannot take all wishes into account. And time is short.

Federal Minister of Justice Christine Lambrecht (SPD) also defended the rapid pace. “The current situation requires quick and decisive action,” the SPD politician told the Handelsblatt. She also spoke in favor of completely nationalizing companies if necessary.

“In the crisis, it is imperative that we protect our country’s economic structure and prevent major companies from being sold out or broken up,” said Lambrecht. “The state is ready to partially or wholly participate in companies if this should become necessary.”

However, the Bundestag was able to implement changes elsewhere. For example, companies that use state aid should not be allowed to pay dividends, bonuses or share packages to their top managers. The housekeepers are learning lessons from the financial crisis. At that time, board members of the real estate bank HRE had approved millions of bonuses despite the state’s rescue.

In addition, the Bundestag demands that the state sell shares in companies “at the latest after ten years”, “unless there are urgent economic reasons or reasons that are important for the German economy”, as it was stated in a bill.

“Against this background, the bonus lock for board members makes sense,” said one MP. “This is the biggest incentive for companies to get out of state participation as quickly as possible.” The Bundestag also assures itself of a say. Rescue measures of over 500 million euros are to be discussed in the Budget Committee.

Help without collateral deposited

Another new feature is that start-ups can slip under the protective shield. Up until shortly before the Bundestag session, the details were discussed. Result: All young companies are entitled to help, provided they are systemically relevant and can demonstrate goodwill of at least 50 million euros.

After the accelerated legislation, it is now a matter of publicizing many rescue measures. The statutory health insurance company points out a particularly important point in a circular: On request, companies in need can have the contributions for pension, health and unemployment insurance due for the months of March to May, so that they do not run into liquidity problems.

The employer does not have to offer any security for this, nor is deferred interest or late payments charged. However, the deferral option only applies if other government aid does not work. For example, the expansion of short-time working stipulates that companies are fully reimbursed by the state for the social contributions for lost hours.

More: What the Bundestag has decided in detail.


Greens are calling for bonuses in retail and healthcare to be tax free

Meetings of the parliamentary groups

Katrin Göring-Eckardt, group leader of Alliance 90 / The Greens, demands tax-free premium payments for employees in the retail and healthcare sectors.

(Photo: dpa)

Berlin To support employees in the retail and healthcare sector in the Corona crisis, they should be able to receive tax-free bonus payments from the Greens perspective. “People in the retail and healthcare sectors are currently doing an important job for society as a whole,” said the head of the Greens parliamentary group, Katrin Göring-Eckardt, of the German Press Agency. “Your hard and currently risky work deserves more recognition.” The federal government should support bonus payments in retail and healthcare and exempt such bonus payments from tax during the Corona crisis.

The German Trade Association (HDE) had also asked for a tax exemption for special payments for employees. Finance minister Olaf Scholz (SPD) said on Tuesday at “Bild live” that his ministry was examining whether the bonuses could be exempt from tax up to a certain amount. In a certain framework, this could probably work quickly and unbureaucratically through the tax offices.

Göring-Eckardt also appealed to retailers not to wait for Finance Minister Scholz to pay premiums. “The supermarket chains are currently making big sales,” she said. “With all the right rescue packages for business and companies, we must not forget the people who are personally at the forefront every day in this crisis.”

Federal Minister of Labor Hubertus Heil demanded higher wages for cashiers and carers. “We are seeing an incredible number of everyday heroes. They deserve not only warm words, but also better wages in the long term, ”the SPD politician told the newspapers of the Funke media group (Wednesday). “Wherever possible, higher wages should now be paid for cashiers. But that cannot be prescribed by the state. “

More: The federal government wants to support companies affected by the corona crisis. But when and who does the state really help? Answers to the most important questions.


Online trading is not a sure-fire success even in the corona crisis

Dusseldorf Media Markt and Saturn tried everything. Because they have to close their branches in more and more countries, both companies have focused all sales activities on the online channels. They advertise equipment for the home office in their web shops. But the additional business on the net is not enough. The parent company Ceconomy has now cashed in the forecasts for sales and profits.

Also Adidas had to close his shops and is now desperately trying to bring the spring collection to customers through his web shop. But that is anything but a sure-fire success. With discounts of up to 50 percent, Adidas offers the goods to sell at least part of them before the summer collection pushes on.

The two groups are exemplary of countless retail companies. “Retailers who already operate multichannel can now switch sales to e-commerce,” says Nils Zündorf, e-commerce expert at the agency faktor-a. “But nobody will be able to compensate for the lost sales from the branches online,” warns Zündorf, the retailer when selling on platforms such as Amazon advises.

No gold digging mood has broken out even with purely online retailers. “Orders in online retail are high, but they don’t explode,” Zündorf observes. When the governments announced the drastic measures earlier this week, the customers on the internet had also initially held back, he observed. “Everyone is rearranging, but it can be expected that online orders will pick up again significantly.”

Accordingly, surveys among online retailers show a very mixed picture. While individual retailers report sales growth of up to 200 percent, others even report falling sales. Of the 135 online retailers surveyed by the Federal Association for E-Commerce and Mail Order in the second week of March, 41 percent reported a drop in demand.

A similar picture was shown by a survey by the retailer association, which represents tens of thousands of small online retailers. In a survey of its members, in which 412 dealers took part, 55 percent spoke of losses in business. Only 9 percent said they benefited from the corona crisis in business.

There is little demand for fashion

The demand in online trading depends heavily on the product category. This is proven by the search queries on Amazon. “Immediately after the pandemic broke out, 80 percent of the top 50 inquiries on Amazon had to do with Corona. Now it is still 40 percent, ”reports Jan Bechler, founder and managing director of the agency finc3 Commerce, the companies like Bosch, Bahlsen or Unilever advises on trading on internet marketplaces.

For example, hygiene products benefit the most, but so do nutritional supplements that promise to strengthen the immune system. Sellers of home and garden items, toys, fitness equipment, food and hardware store products also do good business.

However, only a few people think of new clothes in the current tense situation. In the field of textiles, online sales have already decreased by 20 to 30 percent, reports Stefan Genth, chief executive of the German Trade Association (HDE).

In any case, only retailers who are already active on the Internet have a chance to make online sales. “Retailers who are not yet online retailers have little chance of switching to e-commerce if they have to close their shops,” explains e-commerce expert Bechler. “It is a comprehensive and lengthy process until you have set it up technically, connected your merchandise management and organized the logistics.” Opening a web shop or setting up a shop in a market place takes at least a quarter.

Due to the increased offer on the Internet, it is also becoming more and more difficult for purely online retailers to be noticed by customers at all. “Many retailers and manufacturers are currently increasing their advertising budgets on the marketplaces,” says e-commerce expert Bechler. “Anyone who does not invest in marketing now threatens to lose sales”. One can already see that the costs per click for advertisements on the marketplaces are increasing in many segments.

Employees in protective suits

And the demand is only one side. The effects of the corona crisis have also led to a significant increase in costs for online retailers. The core is usually to secure logistics and your own warehouse.

“We are now working around the clock in a three-shift operation in the warehouse,” reports Boris Häfele, Managing Director of Roast Markets, Germany’s largest online specialist in coffee. He has hired 20 new warehouse employees to keep the business running smoothly even in the new situation.

All employees are now working with protective suits and gloves have to be changed every two hours. There is a break between shifts during which a professional service provider disinfects the warehouse. “For us, these are immense additional costs,” says Häfele.

On the other hand, the crisis also gives him many new customers. Germans spend around 16 billion euros a year on finished coffee in cafes and restaurants. Häfele is now hoping to draw some of this business when people have to stay at home. But he also knows: “How many people will change their behavior in the long term is open.” The increase in sales he feels could also be temporary. He is therefore careful to expand his capacities too quickly.

What all retailers – whether stationary or online – are afraid of: that the crisis lasts so long that consumers generally limit their consumption expenditure. Consumers are already reluctant to buy luxury goods and very expensive products online.

“If the economy shuts down over several weeks, general purchasing reluctance could develop,” warns trading expert Bechler. “People who are on short-time work or fear for their job are more likely to keep their money together.”

More: Psychologist on hamster purchases: “If you see photos of empty shelves, you run into business”


Corona meets the real estate world

Erfurt Shops have to close, trade fairs are canceled, rows of office workers are ordered to their home offices, industrial production sites are shut down, thousands of people are sent in short-time work – it is becoming increasingly clear that the economic consequences will also affect the real estate world as a result of the corona crisis. It is difficult to assess the concrete consequences. Nevertheless, the industry could even benefit from the crisis.

The consequences are most evident in retail properties. In many countries, including Germany, governments have ordered most of the shops to close. Stefan Genth, the managing director of the HDE dealer association, estimates that non-food retailers lose EUR 1.15 billion a day. In three to four weeks there could be bankruptcies, he says in an interview with the “Frankfurter Allgemeine Zeitung”.

The owners of the commercial real estate must also adjust to this. Earlier this week, Unibail-Rodamco-Westfield (URW), Europe’s largest shopping center operator, issued a message to its investors. The group is in dialogue with its tenants. But at the moment it is still too early to see the consequences for your own business. URW has property assets of EUR 66 billion. The share has lost two thirds of its value since the beginning of the year.


The SDax company German Euroshop wants to cut the dividend as a precaution. The share has lost 60 percent of its value since the beginning of the year. Shopping center operators are also feeling the loss of sales at retailers. Rents that are linked to sales are common in this area. “There is often a basic rent plus a share of the success in sales,” explains Birger Ehrenberg, CEO of the Federal Association of Real Estate Investment Experts (BIIS). The owners could cope with the temporary loss of rent, says Ehrenberg. “The real risk is bankruptcy of the dealers,” he says.
Retail owners had previously suffered. This is shown by the current ZIA-IW Real Estate Mood Index (ISI): At the beginning of the year, the situation fell by 30 points to only 65 points. Overall, the barometer ranges from minus 100 to plus 100 points. The mood has probably deteriorated further.


How quickly the situation is changing is also felt by Hans Volkert Volckens, Head of Real Estate at KPMG. The industry was still negotiating deals two weeks ago. But now the requests from clients for support in the crisis have increased significantly. Volckens urges prudence. “The companies now have to soberly analyze their portfolio and tenant structure, assess possible rental losses and weigh up their own financial risks overall,” says Volckens. The need for advice in the hotel sector is now “intensive”. This is often about securing liquidity in the company. That is what the Reutlingen hotelier Hans Joachim Neveling demands. He operates five hotels in Baden-Württemberg, two of which he has already closed temporarily, and short-time work applies to three properties. In his Reutlingen hotel, he otherwise has 95 percent business travelers. Of the 160 rooms there, twelve were still occupied.

Deals under pressure

According to media reports, the Bavarian Chamber of Supply has imposed a stop of at least four to six weeks for investment decisions in the real estate sector. Deals will continue to be reported. In most cases, however, these were threaded in before the corona crisis. In the background, investors explain that new business is often severely hampered. “Visits no longer take place,” says an insider.

In addition, legal uncertainty is spreading on the real estate market: what happens if a tenant can no longer pay rent due to the crisis? The German Tenants’ Association and the GdW have called for an aid fund to protect tenants and landlords against potential loss of rent if tenants struggle with lost income. Vonovia and German living, the two largest landlords in Germany, have declared that they will support their tenants. Lawyers such as Julia Haas, partner and real estate law specialist at the Freshfields Bruckhaus Deringer law firm in Frankfurt are also feeling the increasing need for advice from tenants and owners. “Our clients are primarily concerned with the topic of rent reduction,” says Haas. For example, the question arises whether tenants can reduce the rent due to a lack of rent or a disruption in the business situation. There is no general answer. “In principle, however, the use risk of the property lies with the tenant,” explains Haas. That means: If the operation is restricted by official requirements, this is initially a problem for the tenant, not the landlord. However, it could become a landlord problem if the building becomes unusable due to certain property-related defects. At the moment, however, it can also be seen that landlords and tenants agree on the question of rent payments in order to cushion emergencies. The city of Hamburg has instructed its real estate companies to offer commercial tenants a three-month delay in rent payments if necessary. “In the private sector, rent deferrals are also agreed where it appears necessary,” says Haas.

Even with Gerhard Molt, specialist lawyer for tenancy and residential property law at the law firm Eversheds Sutherland, “the phones are running hot”. In addition to tenant rights issues, building contractors face challenges: Molt says there are already significant disruptions on almost all major construction sites. Skilled workers from the Czech Republic, Poland, Italy and many other countries can no longer enter the country, and there are sometimes supply difficulties with special components. “You will have to look closely at the delays and additional costs that are actually caused by the corona crisis and which problems actually have other causes,” says Molt.

In return, the expert Ehrenberg does not expect abrupt price drops in property valuations. This is good news for private investors who have invested their money in open-ended real estate funds, for example. “Real estate is not valued on the stock exchanges like stocks on a daily basis, but rather sustainably and on fixed deadlines,” says Ehrenberg. This leaves room for hope: If the spread of the corona virus can be curbed, the consequences for property values ​​could remain manageable.

In case of doubt, the real estate market could also benefit from the crisis: central banks have lowered their interest rates and relaxed monetary policy. Until the very end, this was the basis for the real estate boom. “Once the current state of shock is over, it is likely that demand will pick up in many real estate segments,” said Ehrenberg.

More: Six things the ECB wants to calm the financial markets with.