Ifo business climate index falls to record low

Berlin The mood in Germany’s economy is catastrophic. The most important leading indicator, the Ifo business climate index, fell from 85.9 to 74.3 points in April. This is the lowest value ever measured. There has never been a stronger decline. “This is mainly due to the massive deterioration of the current situation,” said Ifo President Clemens Fuest on Friday.

In addition, companies have never been so pessimistic about the coming months. “The corona crisis hits the German economy with full force,” said Fuest. The crisis is now affecting all industries. Even the main construction industry is now worried about the future. So far, together with consumption, it has been the pillar of the economy.

The fact that the effects of the corona-related standstill would hit companies hard in April had become clearer every day since Easter. On Thursday, the Ifo reported that the crisis had hit the labor market: in industry and service providers, one in five companies surveyed by the Ifo want to lay off employees or not to extend temporary jobs.

It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. In almost all industries, more than 40 percent of companies want to postpone investments – even 31 percent of them are in construction.

How deep the recession will become in 2020 is currently difficult to estimate. “We do not know how much we can start the economy up again without increasing the risk of infection,” Monika Schnitzer told the Handelsblatt. The situation is not comparable to any post-war recession. However, she is confident that Germany will get there in the next few weeks if protective measures are increased and tracing apps are increased.

The purchasing manager index of the IHS Markit institute also fell to a record low on Thursday. In this manager survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey.


“Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith. In the service sector, more jobs were cut than at the height of the financial crisis recession in April 2009, and in industry, too, the reduction in personnel accelerated – despite short-time work.

In any case, leading economists are starting to further lower their forecasts for 2020. The head of economic operations, Lars Feld, now expects that gross domestic product (GDP) will shrink by at least five and a half percentage points in 2020. It could shrink more than in the 2009 financial crisis recession.

Three and a half weeks ago, when the Economic Advisory Council for Economic Affairs Peter Altmaier (CDU) presented a special report on the corona pandemic, a minus of five and a half percent was still the worst-case scenario. However, the IMF expects German GDP to collapse by seven percent in 2020.

Even in the large economic research institutes, which predicted a minus of 4.2 percent for 2020 in their joint diagnosis two weeks ago, many expect that a five will be before the decimal point. The markets are therefore eagerly awaiting which recession forecast the Federal Government will commit to in the coming week.

However, Stefan Kooths, economic expert at the Kiel IfW, also warned that he would now outdo himself in horror scenarios: that April would be the low point of the year and that GDP would decline by ten percent in the second quarter, he said in early March already expected. The question now is how quickly a recovery can begin.

France: lowest since 1980

However, this also depends on how quickly the economy in the EU countries most affected by the pandemic can get going again, Italy, Spain and France. “As intertwined as our economy, for example, with that in Italy, we have to be very interested in the EU not breaking apart,” said Schnitzer. “It is not just about solidarity, it is in our interest if we help other EU countries,” she emphasized.

However, the prospects for the economy are currently catastrophic in all large EU countries. For example, the IHS Markit Purchasing Managers’ Index fell to a record low for the euro zone on Thursday. In Italy, the IMF expects GDP to decline 9.1 percent this year.

The mood in France’s economy also deteriorated massively in April due to the corona crisis. The business climate has dropped to the lowest level since the start of the surveys in 1980, according to data from the national statistical office Insee on Thursday. The index fell by 32 points to 62 points. There has never been such a sharp drop.

Economic activity in France was 35 percent lower in April than it was before the economy shutdown in March. Insee also does not expect the business climate to recover anytime soon. In this unprecedented environment, the behavior of companies and consumers can hardly be predicted. The French government expects gross domestic product to decline by eight percent this year.

More: According to the Ifo Institute, a fifth of German companies are planning to cut jobs due to the corona crisis.


How professionals position themselves on the stock exchange

Frankfurt Stock Exchange

Many investors are puzzled as to where the markets will go.

(Photo: dpa)

Frankfurt The uncertainty is great. The oil price and many stock prices are in the basement. The mood among many managers is bad. The corona crisis keeps the financial markets in suspense every day. Many investors are now thinking more than ever about where to invest their money in these unstable times.

Because the violent ups and downs on the markets shows that there is still no peace on the stock exchanges. This leaves many investors in doubt about their previous investments. Keep or prefer to sell? This is an important question for many investors, especially with equities.

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Disastrous economic data weigh on the Dax

Frankfurt The series historically poor economic datathat investors currently have to digest does not stop. That is also a burden for the German Leading index Dax. The stock market barometer closed on Friday 1.7 percent lower at 10,336 points.

“This drug had recently made a significant leap on the stock markets,” said Thomas Altmann, portfolio manager at QC Partners. “Therefore, this announcement is a clear warning to all euphoric investors.”

The puzzle is only slowly completing, how badly the corona pandemic is paralyzing the global economy. It was announced on Friday that the UK retail collapsed by more than four percent in March compared to the same period in the previous year – a decline that was not achieved even in the 2008 financial crisis.

Also in Japan the retail sector is idle: Merchants in the capital city of Tokyo reported a drop in sales of almost 35 percent in March. A similar decline to this extent is not to be found in the Bloomberg financial services time series.

There were also bad numbers from industry on Friday: The European commercial vehicle market fell almost half in March due to the coronavirus pandemic. With 105,196 vehicles, 47.3 percent fewer were registered than in the same month last year, the responsible industry association Acea announced on Friday in Brussels.

The number of registrations had already declined in January and February, but the decline in March was again considerably greater. The falls were most pronounced in the countries particularly hard hit by the Covid 19 pandemic: Italy (minus 66.1 percent), Spain (minus 64.4 percent) and France (minus 63.1 percent).

The managers surveyed by the Ifo Institute also assessed their situation as worse and are also more skeptical about the future. The published on Friday Ifo business climate index for April fell more clearly than expected: from 85.9 points in March to 74.3 points. That’s the lowest value ever measured. Economists interviewed by the Reuters news agency had expected a drop to 80.0 points. “The mood among German companies is catastrophic,” said Ifo President Clemens Fuest.

On Thursday, the GfK consumption barometer in Germany and the purchasing manager indices for the European service sector signaled that Germany and Europe were heading for a severe recession. The European Union is steering because of the corona crisis, according to EU Industry Commissioner Thierry Breton towards a drop in economic output of five to ten percent.

In addition, investors are also looking at the Federal Chancellor. Angela Merkel consults with representatives of business and trade unions on the corona crisis. This could also involve possible further easing and economic policy measures.

Look at the individual values

Deutsche Bank and Commerzbank: The rating agency Standard & Poor’s (S&P) has given it a thumbs-up because of the economic impact of the corona crisis at Commerzbank, Deutsche Bank and other German financial institutions. In the Commerzbank S&P downgraded the credit rating by one grade to “BBB +”, the outlook remains “negative”, as the credit rating officers announced on Thursday.

At Deutsche Bank, S&P confirmed the rating of the creditworthiness with “BBB +”, but lowered the outlook to “negative” from “stable”. While the creditworthiness guards doubt that Commerzbank can implement its new strategy “Commerzbank 5.0”, including the planned sale of the Polish subsidiary M-Bank, as planned, they see the restructuring of Deutsche Bank basically on track. The shares of the two largest German financial institutions fell by 6.8 percent (Deutsche Bank) and 4.1 percent (Commerzbank) and were among the biggest losers on the stock market on Friday.

Lufthansa: Down eight percent it went for the papers from Germany’s largest airline. So that leads Lufthansa the Dax’s list of losers. At € 7.20, the shares cost less than they had since the Sars pandemic 17 years ago. According to insiders, the airline plans to put together a government aid package of up to ten billion euros early next week. The loss increased to EUR 1.2 billion in the first quarter. Due to the pandemic, air traffic in Germany is almost completely stopped.

Nestlé: The Swiss food giant, on the other hand, is doing very well. Nestle accelerated its growth in the starting quarter 2020. Organic sales growth in the first three months was 4.3 percent, as Nestle announced on Friday. The share rose 1.8 percent. As the full impact of the Covid 19 pandemic could not yet be assessed, Nestle is tentatively sticking to the original outlook for 2020 as a whole. The Group expects organic sales growth and the underlying operating profit margin to improve.

Sanofi: The French pharmaceutical company benefits from the strong demand for painkillers and antipyretic due to the spread of the coronavirus. In the first quarter, currency-adjusted profit rose by 16.1 percent to 2.04 billion euros Sanofi announced. Sales climbed 6.6 percent to EUR 8.97 billion. Around half of the profit and sales growth is due to the corona pandemic. The corona effect will subside in the course of the second quarter. Sanofi confirmed the forecast for 2020. The group has set itself a five percent increase in earnings per share. The papers climbed 1.9 percent.

Eni: The Italian oil company the corona pandemic and collapsing oil prices drove a billion dollar loss in the first quarter. The net loss was 2.9 billion euros, as the Italian company announced on Friday in Rome. Had in the previous year Eni earned just under 1.1 billion euros. For example, Eni had to adjust the book value of its oil inventories to falling market prices, as well as depreciation on oil and gas activities. Adjusted, Eni achieved a small plus of 59 million euros, a fraction of the previous year’s profit of 992 million euros. Revenues plummeted by a quarter to around 13.9 billion euros. The stock lost 2.9 percent.

Look at other asset classes

Oil prices continued their recovery from the previous day on Friday despite the price losses in the meantime. The decisive factor on Wednesday, however, was not the easing of weakness in demand and excess supply, rather political tensions between the USA and Iran caused rising risk premiums for crude oil. In Asian trade, a barrel (159 liters) of the North Sea type Brent last cost $ 21.57, up 1.1 percent. The US WTI was traded at $ 17.09 per barrel, up 3.5 percent.

The euro exchange rate rose slightly on Friday. The European common currency was trading at $ 1.0804 in the late afternoon. The European Central Bank (ECB) set the reference rate on Friday at $ 1.0800 (Thursday: 1.0772).

Italy’s central bank Market insiders broadened their purchases of domestic government bonds on behalf of the ECB on Friday. The Banca d’Italia is buying slightly more titles on average than in the past few days, said a primary trader. A second insider said that she was more active on the market. Yields on ten-year bonds fell around ten basis points over the course of the day to 1.899 percent. They had previously climbed above the two percent mark when disappointment over the results of the EU summit on Thursday spread on the bond market.

With agency material.

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

“When planning wealth, the rule is: never get out completely!”


Economy warns of exaggeration in the fight against Corona

Dusseldorf The Chairman of the Council of Experts, Lars Feld, urges the Federal Government to take measures to fight the corona crisis. “Above all, what is currently being discussed is problematic. You get the impression that every industry wants specific support, ”Feld told the Handelsblatt.

The hospitality industry wants the reduced VAT rate that has now been decided. The auto industry is again asking for a scrappage premium, and retailing vouchers, says Feld. “You could go on almost any way – who doesn’t have one yet, who wants to do it again.”

“If you go this route, you will hardly be able to catch it afterwards in terms of fiscal policy,” warns the head of the Freiburg Walter Eucken Institute. This applies “also to social policy measures such as the increase in short-time work benefits or the extension of the duration of unemployment benefits”. “I’m more worried about whether we will be able to return to normal economic policy,” says Feld.

The economist also disapproves of the federal government’s policy on industrial policy: “If Corona is now used to quietly implement questionable industrial policy goals, I find that unacceptable.”

Specifically, it refers to the recent tightening of the Foreign Trade and Payments Act. “The goal of building a fortress Europe is definitely the wrong way to go,” said Feld. Germany in particular, as the largest economy, must speak out for openness. “We cannot leave the Dutch alone to stand up for a market economy policy,” he warns.

He expressly warns against the introduction of a property tax. “To talk about a property tax in this situation is insane. The best way to pay off the debt is with an intelligent growth strategy, ”said Feld.

Read the full interview here:

Mr. Feld, you are considered the nation’s regulatory conscience. The state experiences something of self-empowerment in corona times. What scares you more: the virus or the political measures against it?
“Fear” is the wrong expression in both respects. I know the medical problems abstractly, but I don’t feel any threat. Of course, this can change quickly if I experience illnesses in my personal environment. This is often the case. As far as the state measures in the fight against the crisis are concerned, I am not afraid either, I am more concerned that we will be able to return to normal economic policy.

The state intervenes massively in contract law, it relaxes bankruptcy law, it communitises risks. In your opinion, is that all still proportionate?
Overall, I think the aid package is proportionate. You can argue about individual measures, especially with tenancy law. However, one has to say that the state there has been massively interfering with freedom of contract for a long time: through the rent brake or the rent cover in Berlin, which is probably unconstitutional. I criticized that before Corona – and I’m also criticizing it now.

So you don’t see a new quality of state intervention?
But, above all, what is currently being discussed is problematic. One has the impression that each branch wants specific support. The hospitality industry wants the reduced VAT rate that has now been decided. The auto industry is again asking for a scrappage premium, and retailers are demanding consumer vouchers. This could be continued almost indefinitely: Who has not yet, who wants again?

If you go this route, you will hardly be able to catch it afterwards in terms of fiscal policy. Ultimately, this also applies to social policy measures such as raising short-time working benefits or extending the duration of unemployment benefits.

The current bailout package is well over a trillion euros, i.e. more than three times the federal budget – these are sums that recently seemed unthinkable. Will the state’s calculation work, so now to save jobs, will it cost what it wants? Otherwise, the state would have to pay for the millions of unemployed anyway …
Yes, the sums are big. However, many simply add up everything that is put in the shop window – loans, grants, guarantees and guarantees. You have to take into account that not everything has an impact on expenditure, loans are repaid and guarantees are not drawn. The decisive factor is whether the measures are targeted.

Where do you see the debt ratio in the medium term?
By the end of 2021, we will probably be back to around 80 percent of economic output, roughly the level we had at the end of the financial crisis.

Do you think politics and science still have an overview? When was it that the state had to keep thousands of companies alive – and probably for months?
I don’t think the state will be able to maintain this for months. It can mitigate the consequences, but it will not be able to save all companies and jobs. We will have bankruptcies. Ultimately, it’s about helping companies that have a viable business model over this cliff. It should not be forgotten that companies are in this situation because the state massively restricts our freedoms during the pandemic. If there were a claim for compensation from the state, the whole thing would be more expensive.

Who pays the bill in the end? There is already debate about balancing the burden …
There is, of course, this debate, but it is a harmful one, with a particular focus on the ideological interests of the parties. To talk about a wealth tax in this situation is insane. The best way to pay off your debt is to use a smart growth strategy.

What do you think of the fact that the private banks are now providing KfW loans with a volume of up to 800.000 euros no longer have to assume any liability, so get a 100 percent guarantee from the state?
If you bear in mind the Federal Government’s goal of mitigating corona-related defaults with liquidity aid, that makes perfect sense. Of course, it is cleaner from a regulatory perspective to take the banks at risk. But then the measure would not work. Even with a liability of only ten percent, banks are very hesitant to grant loans in this difficult situation. Of course, we cannot grant such KfW loans on a permanent basis.

We cannot leave the Dutch alone to stand up for a market economy policy.

But isn’t that a disguised bank bailout program?
I would not say that. It dissolves the risk aversion of privately liable bank executives. Ultimately, credit-based liquidity support is hardly an option for many companies currently affected, provided they would become excessively in debt.

Another instrument that is often mentioned is government participation. Will it happen?
I cannot imagine that we can do without state participation in certain industries – for example, with airlines. Until the Lufthansa back to pre-crisis levels, it may take a long time. The decisive factor is whether they are silent participations or whether the state wants to exercise control rights. I prefer the former because with a stock package it usually takes longer for the state to withdraw.

The bank bailouts during the financial crisis in the USA are always considered exemplary, although there were equity investments …
Yes, that’s right, but the state quickly withdrew there. The following applies: If the control function, then please use the exit scenario.

They probably refer to Commerzbank, where the state is still involved after more than ten years.
Yes, it would be even more serious with massive industrial holdings like we used to have.

Now there was a trend towards industrial policy even before the corona crisis. The economics minister tightened the foreign trade law – and added again during the corona crisis: are we experiencing a turnaround?
Unfortunately, there is a turnaround. If Corona is now being used to quietly push through questionable industrial policy goals, I find it unacceptable.

Now this policy is being carried out by the CDU-led Ministry of Economic Affairs. Are we threatened by French conditions?
The goal of building a fortress Europe is definitely the wrong way to go. Germany in particular, as the largest economy, must speak out for openness. We cannot leave the Dutch alone to stand up for a market economy policy.

Isn’t there a good reason to protect some industries – when it comes to security, for example in the case of the Chinese network supplier Huawei?
Of course, the state has to look when a state investor from China is investing in critical infrastructure. But now that doesn’t just apply to China. American investors are now being looked at just as critically. A systematic foreclosure strategy threatens. What is considered “safety-relevant” must therefore be clearly defined.

The law speaks of an “expected impairment” of public order or security. There seem to be no limits to arbitrariness, right?
The Ministry of Economy is now keeping everything open to prevent any takeovers. The whole thing is also enriched with a participation facility and the economic stabilization fund. It is a very unfortunate combination.

Even mouth protection and protective clothing are considered to be safety-relevant. They may be relevant to health, but they do not have to be produced in Germany. In this case, the state must create strategic reserves.

Back to the economic risks again. If the lockdown has such devastating consequences in Germany, what about countries like Spain and Italy that are already heavily indebted?
There is no way around these countries pursuing an expansionary fiscal policy and driving up debt levels. There is no alternative in the face of this great crisis.

Aid programs such as those in Germany cannot be afforded by these countries, which have been hit much harder by the corona crisis …
I wouldn’t say that in general. Spain and France have enough leeway with a debt ratio of 100 percent. I think 120 percent would be possible without them being in the focus of the financial markets.

Italy, which has a debt ratio of almost 140 percent, financial market players have long had their sights on them. Only thanks to the massive intervention of the ECB has interest rates dropped to a tolerable level again …
Yes, Italy is the real problem. The government debt there is moving towards Greek dimensions in terms of economic performance – and this is about a G7 country.

As far as the corona pandemic is concerned, Italy is not in debt to this crisis. Regulatory policy or not: Do you understand Italy’s prime minister, who vehemently demands the solidarity of the strong countries?
I differentiate between understanding and acceptance. I understand that Italy needs support given the many deaths. And I understand that the Italians are now doing everything they can to protect themselves against possible distortions in the financial markets with external help. What I cannot accept is Premier Conte’s blackmail strategy, which is unique in its sharpness.

Isn’t this attitude due to sheer misery?
That may be the case, but the extortionate approach could end up being counterproductive. The government cannot credibly threaten to exit the euro because the economy would collapse completely.

But the Italians know very well that an exit from Italy would very quickly result in a collapse of the monetary union, which the rest of Europe can hardly afford …
This may be. Nevertheless, Conte’s strategy is questionable because Italy would suffer much more. In Italy, therefore, there is rightly a debate as to whether the prime minister does not overdraw. Italy is well supplied with the funds that have been made available – i.e. the scarcely conditioned loans from the ESM rescue fund with the possibility for the ECB to buy unlimited government bonds (OMT).

I reject joint and several liability. That would be a fall for me.

Italy insists on corona bonds, i.e. the joint borrowing for this crisis. Wouldn’t that be an important symbolic signal for Europe’s cohesion?
No, I’m completely the politician of order. I reject joint and several liability. That would be a fall for me.

But isn’t it the more honest way in the end? A communitization of risks has long been taking place through the ECB’s balance sheet, an institution that is not at all legitimized for such a redistribution policy …
Again, joint and several liability between states is out of the question for me. Other forms of joint liability, such as joint liability or guarantees for debt, can be discussed.

Discussions about a fund at EU level – possibly parallel to the ESM – that is financed by bonds guaranteed by member states and from which transfers are paid – all of this is conceivable. The problem with joint and several liability: Here the creditor can pick out the most solvent country – and force it to be repaid.

The crisis could hit the emerging markets even more severely than Italy. We are obviously experiencing a crisis of a whole new dimension. Not only almost all industries are affected, but also all regions of the world – at the same time. Some already compare the economic consequences with the Great Depression in the 1930s. Do you think this is alarmist?
No, I don’t think it’s alarmist. There are parallels as to the dimension of the economic downturn; but not on the job market. In addition, the reasons are completely different. The current crisis cannot be compared with the Spanish flu either. At that time after the First World War, the economies were very weak.

The fact is: A crisis as we are now experiencing it is unique. It is not only the slump in the economy as a result of the lockdown, but also the interruption of the international supply chains.

How do you explain that the markets are still reacting almost moderately?
The markets are still assuming that the gigantic rescue packages will help to overcome the liquidity problems. Whether this will really be the case depends on the further development of the pandemic. I would therefore not rule out further slumps in the financial markets.

The Ifo Institute anticipates a 20 percent drop in GDP in the worst scenario. Do you think such a scenario is conceivable?
I’m not that pessimistic. The 20 percent of the Ifo Institute is an annual projection, not an annualized quarter. This means that the relatively robust first quarter is included, so that the economy would not get on its feet in the third and fourth quarters.

At the moment, almost all countries except Sweden are pursuing the same corona strategy: lockdown, bans on contacts and so on. There has never been an experiment like this. Could this strategy turn out to be a global mistake in the end?
Afterwards we’ll be smarter. Yes, there are voices that can be taken seriously and say that we unnecessarily stall the economy. Only: If we look at the infection curves and compare them with other flu waves, we see that the rise at Corona is much steeper. If we let it go, significantly more deaths would be unavoidable. So I think trying to flatten the curve so as not to overload the health system is the right strategy.

Finally, a personal question: It was not long ago that your colleague Peter Bofinger from Würzburg was the last Keynesian. But now conservative economists are also calling for massive government intervention. Ifo boss Clemens Fuest, for example, or IW boss Michael Hüther, who most recently spoke in favor of corona bonds. Do you sometimes feel like the last politician in the country?
Do not worry. There are still a large number of economists who think in terms of regulatory policy. In addition, I am just as pragmatic as my colleagues in this unique crisis that we are currently experiencing.

Mr. Feld, thank you very much for the interview.

More: EU summit: These are ideas for financing the EU reconstruction funds


Almost a fifth of the companies want to cut jobs

Berlin Daimler– HR Director Wilfried Porth didn’t gloss over anything: “Obviously something is breaking away at the moment that no one knows if it can be caught up,” the manager said last week. The carmaker had to accept a drop in profits of almost 80 percent in the first quarter, sales of the core brand Mercedes decreased by 15 percent. “The fact that we will need to adjust is obvious,” said Porth. He didn’t say the word job cuts. But even before Corona, Daimler had decided to cut up to 15,000 jobs.

The fear of jobs is back in Germany and the virus pandemic will leave deep marks on the job market. Every second company is already doing short-time work. According to a survey by the Ifo Institute, almost a fifth of the companies want to lay off employees or not to extend temporary jobs.

“The fear of jobs seeps in,” says Ifo economist Klaus Wohlrabe. The job cuts plans are apparently based on the concern of many companies that the restrictions on public life in the corona crisis will not end in May.

On average, the companies surveyed expected four months of partial standstill. 84 percent feel a drop in sales due to the corona crisis, only four percent register a growing business. According to the Federal Employment Agency (BA), almost every third of the 2.2 million companies with at least one employee who is subject to social security contributions have registered short-time work.

Previous employment forecasts are becoming more and more waste every day that the corona crisis continues. “For the labor market, we expect unemployment to rise sharply over the next few months. But many companies keep their people, you can see that from short-time work, ”says Enzo Weber from the Institute for Labor Market and Vocational Research (IAB).

BA boss Detlef Scheele expected a rise in unemployment by 150,000 to 200,000 people in April a month ago. The Nuremberg authorities will present the current data next Thursday.

Domestic demand collapses

There is hardly any improvement in sight if you look at the economic development: the purchasing manager index of IHS Markit has plummeted. In the survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey. “Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith.

“Demand levels will not return to pre-crisis levels anytime soon,” says Sascha Haghani, head of the global restructuring practice at management consultancy Roland Berger. That’s about it GfKConsumer barometer, which measures consumer mood, plummeted to a record low.

“Sooner or later the companies will have to adjust their costs accordingly,” Haghani expects. Probably also through job cuts: According to the IHS, more jobs were cut in the service sector than at the height of the financial crisis recession in April 2009, and the reduction in personnel is also accelerating in industry.


The Ifo survey also shows how wide the shock waves are spreading in the economy: in industry and service providers, almost every fifth company wants to lay off employees or not to extend temporary jobs. It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. Leading economists such as the head of business practices, Lars Feld, are starting to adjust their forecasts for 2020 downwards.

After Chancellor Angela Merkel and the Prime Ministers decided a slow restart of the economy last week, he expects gross domestic product (GDP) to shrink by at least 5.5 percentage points in 2020. Even in the economic institutes, which predicted a minus of 4.2 percent for 2020 in their joint forecast two weeks ago, it is now expected that a five will be before the decimal point.

The IAB had anticipated a 4.7 percent decline in GDP in March, when the economy largely stands still for two and a half months and only normalizes by the end of the year. In this case, the number of unemployed could temporarily rise from the current 2.3 million to more than three million, the Nuremberg researchers predicted at the time.

A well-known restructuring expert expects Corona to increase unemployment to as many as four million people. Especially badly hit sectors such as tourism and gastronomy are affected, but also important branches of industry such as the automotive suppliers.

The government is obviously also assuming a long period of weakness on the labor market. For example, for all unemployed people who would slide into Hartz IV between May and December, the duration of the unemployment benefit will be extended by three months. “Those who are just becoming unemployed or who have recently become unemployed currently have little chance of finding a job again,” said Labor Minister Hubertus Heil (SPD).

In order to counter the allegations made by the unions, in particular, that politicians are more concerned with companies than with employees, the coalition committee also decided on Thursday night to increase the short-time work allowance – staggered according to the duration of benefits.

It is currently 60 percent of net income and 67 percent for employees with children. From the fourth month in Corona short-time work, employees whose working hours are reduced by at least half are now to receive 70 or 77 percent. From the seventh month, the rates increase to 80 to 87 percent.

In addition, short-time workers who take up another job can earn up to the amount of their previous monthly income. So far, this was only true for “systemically relevant” activities such as care or agriculture.


The gradual increase in short-time work benefits has met with criticism: “I would have preferred a faster increase, especially for low-wage earners,” said Sebastian Dullien, head of the Institute for Macroeconomics and Business Cycle Research (IMK). In a survey, 40 percent of employees who were on short-time work said that they would get by with the money for a maximum of three months.

Employers see “contribution club”

The decision met with a mixed response among the unions, which had hoped for a general increase to 80 or 87 percent from the start. “This protects many employees from existential hardships,” praised IG Metall boss Jörg Hofmann. On the other hand, the chairman of the Food, Beverage and Catering trade union (NGG), Guido Zeitler, declared that the increase was correct, but was too small and too late.

In the hospitality industry, employees could probably only expect 80 percent of normal net wages in October 2020. According to the NGG calculations, according to the new plans, a cook in Berlin will have around 1,070 euros instead of around 920 euros and short-time work from around 1,220 euros from the seventh month. “For hundreds of thousands of people with low incomes, the only thing left to do is to apply for Hartz IV,” said Zeitler.

IAB labor market expert Weber also criticizes the fact that the planned changes will not benefit employees in the low-wage industries in a very targeted manner. “In the end, industrial sectors that have long been in recession could benefit in particular.”

For Holger Schäfer from the employers’ institute of the German economy (IW), it is not at all clear which problem the government wants to solve with the compromise: “In the end, a lot of money is spent on a purpose that is not clearly defined.” According to Schäfer’s calculations, the BA would need 24 billion euros to send 4.5 million full-time average earners without children on short-time work for three months. The employment agency’s reserve is just under 26 billion euros.

The criticism from business was correspondingly harsh. Employer President Ingo Kramer praised coalition decisions such as help for restaurants and the easier return of losses for companies. But they would be overlaid by “spending money with a watering can”.

The employers’ association Gesamtmetall criticized that the decisions on short-time work were expensive and caused an enormous additional administrative effort at the BA: “There is great concern that when the economy restarts, the tax and contribution club will fall on the employees and companies,” said CEO Oliver Zander the Handelsblatt. BA boss Scheele said that he would have liked a “simpler regulation”.

Monika Schnitzer, a new member of the Council of Experts, told Handelsblatt that she could understand that the government wanted to expand short-time work benefits. “But I think the chosen way of increasing is problematic.” After all, many employers voluntarily increased to keep their employees. I am afraid that it will have a high share of deadweight effects. ”

Ifo President Clemens Fuest believes the decisions will stabilize consumer demand. They are therefore also “a suitable economic policy measure”. The same applies to the extension of the period of unemployment benefit

More: Tax cuts, premiums, aid: Germany’s economists argue about state aid


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.


Investment experts were too euphoric

Frankfurt At the end of the week, many investors have regained their courage after there have been some hopeful reports in the fight against the corona virus.

Even if a drug to treat Covid-19 was found quickly, the way back to normality would be a long and rocky one, said portfolio manager Thomas Altmann from the investment advisor QC Partners. “The consequences of the economic lockdown at company level and the rise in the unemployment rate cannot simply be reversed.”

Timo Emden from the analytical company of the same name said something similar. “Investors are longing for the big hit in the corona pandemic,” he said. For the market, however, it is still clear that even an active ingredient is not a panacea for the affected global economy.

The German Leading index Dax climbed to 10,756 points on Friday. By the close of trading, however, he surrendered part of the profits and closed with a gain of almost 3.4 percent at 10,642 points. The development of the EuroStoxx 50 is similar: the European stock market index went out of trading with an increase of 2.7 percent at 2,888 points. In the US, investors were also initially in good spirits on Friday. The Dow Jones ended the year up 2.9 percent at 24,216 points.

Badly hit global economy

Jochen Stanzl, chief market analyst of the broker CMC Markets, compared the current increases in the stock market indices with the situation before the big sell-off in December and January. “Even now soaring technology stocks are driving like Netflix, Amazon and Tesla attention away from the fact that the real economy is in ruins, ”he said. “In the end, these companies will do good business, but they won’t save the global economy.”

Despite all the euphoria, the companies are “facing a major adjustment process, accelerated by the additional costs and burdens from the lockdown,” says Stanzl. At the moment, no one could say what the size of company closures would be in the end and how long it would keep stock exchanges from reaching the old highs.

In view of the relaxation of the contact restrictions, Jörg Krämer, chief economist at Commerzbankthat the economy will pick up strongly in the short term. “In the long term, however, there are considerable dangers – for example, due to the sharply increasing corporate debts caused by the crisis,” he said. A V-shaped upturn, i.e. a very rapid pickup in the economy, is unlikely. Rather, a gradual return to growth can be expected.

Jörg Krämer

The chief economist at Commerzbank expects the economy to pick up strongly in the short term.

In the coming week, the developments around the corona virus and current figures on the economic situation will continue to be the dominant topics on the markets. For example, stock marketers are eagerly awaiting the EU’s virus crisis summit next Thursday. Among other things, there will be a possible inclusion of jointly guaranteed debts to overcome the pandemic consequences.

In addition, shareholders will increasingly look at the quarterly figures of individual companies in the coming week. After companies in other countries have already submitted figures for the first quarter, the balance sheet season is now also beginning in Germany. The kick-off is as usual SAP.

In the current balance sheet season, a total slump in profits of 40 percent can be expected, said Ulrich Stephan, chief investment strategist for private and corporate customers at German bank. Nevertheless, he is optimistic: thanks to the multi-billion dollar aid packages from central banks and governments, investors are looking beyond current developments and are concentrating on profits in the second half of the year and 2021.

Entry into the stock market

Given the current price gains, some investors are wondering whether they have already missed the best opportunity to enter stocks. According to the DZ Bank analysts, the volatility will remain high for the time being due to the continuing uncertainties caused by the corona virus and further price setbacks cannot be ruled out. “From previous stock market cycles, we know that after a recession has bottomed out, the stock market has the highest and most sustained growth rates,” said DZ-Bank. “It will take some time before this low is reached. Our economists see this so far in the second quarter of 2020. “

Looking ahead to the coming years, the DZ Bank analysts expect: “By 2022/23, the Dax companies could earn as much again as in the previous record year 2018, and the Dax could reach its highest level again in 13,800 points in 2024.” Who in the continue to buy shares in the coming quarters, should achieve very good long-term investment results. However, it is important to only have shares in companies in the portfolio whose prospects are viewed positively over a three or five year period.

Altmaier wants to gradually ramp up the economy

This is how it will continue in the coming week:

Monday: At the beginning of the week, quarterly figures of Philips, Vivendi, and IBM expected. In Japan, figures on foreign trade are published in March, in Germany data on producer prices in March. The Bundesbank also publishes its monthly report.

Tuesday: The balance sheet season starts and SAP starts as usual. However, the software company had already published preliminary results in early April and lowered the full-year targets. In addition, Netflix, London Stock Exchange (LSE) and Coke Numbers before. The ZEW index provides information on the mood of German stock exchange professionals. UK unemployment figures come from London.

Wednesday: Preliminary data on consumer confidence in the euro zone are expected from Brussels. Lay at the company Alcoa, Ericsson, Caterpillar, Heineken and Roche first quarter figures.

Thursday: The publication of the GfK index will give an indication of the Germans’ buying mood. Alexander Roose, chief equity investor at asset manager Degroof Petercam, expects consumer confidence to “be severely impacted by the severe recession in the services sector due to rising health care costs and lower purchasing power”. In addition, the preliminary Markit purchasing manager index for the euro zone (industry, service, composite) is published. In the United States, the number of initial jobless claims for the week ending April 18 is published. Among other things, they provide insights into their books Credit Suisse, Volvo, Renault, Unilever and Intel.

Friday: At the end of the week, the Ifo index is on the schedule. It provides information about the mood on the German executive floors. Experts expect another slide to 77.2 points from 86.1 points in the previous month. In the United States, data on orders for durable US goods are also published. Experts expect a drop of 11.4 percent. Quarterly figures come from Sanofi, American Express and Nestle.

More: Yield in Corona times: With which investments you can still earn money


Clemens Fuest on Corona: “Debate is considerable progress”

Clemens Fuest

The Ifo President demands more data as a basis for information in order to shape the opening process.

(Photo: dpa)

Clemens Fuest was one of the first group of scientists to advocate a gradual exit from a standstill. The Ifo boss says: Politicians should have been a little bolder.

Mr. Fuest, are we now in a transition phase with the first steps of easing?
Exactly. This crisis has three phases: first the lockdown, then the gradual easing, and finally the return to normal. We will probably only reach the third phase if there is a vaccine.

Do you think the cautious easing now decided is correct?
It is definitely a positive sign to reopen many shops, even if I don’t understand why this should depend on the size of the shops and not just on distance and hygiene rules. However, when I think that there shouldn’t be any talk about an exit two weeks ago, it is a significant step forward that there is now a broad debate.

Do the decisions help the economy?
Quite. I find it very positive that there should be a staff at the federal government that supports medium-sized companies in maintaining the supply chains. State coordination is needed because each country currently has its own rules about which companies are allowed to produce and which are not. If there is no exchange between the governments, the opening process will not work here either.

Does it make sense to keep schools closed?
Basically, it makes sense if the ministers of culture are now drawing up a plan for gradual opening, even if I wonder why this has not already happened. But what has to happen very quickly now is that teachers are again looking after disadvantaged children who are difficult to learn at home and have no digital access.

Which suggestions of your expert group do you see wrongly ignored?
A great deal has been taken up. What I still lack are targeted improvements to the statistics. We need a lot more data as a basis of information to shape the opening process.

More: Exit from the shutdown: Merkel announces cautious opening


Angela Merkel announces cautious opening

Berlin Schools will remain closed, as will most of the shops and businesses, but the shutdown is about to end: measures to combat the corona virus are to be gradually relaxed at the beginning of May. Chancellor Angela Merkel and the heads of state have agreed on this. There should be no “rushing ahead,” Merkel said: “We have to ensure the successes we have achieved.” That is why politics has to be extremely careful.

In recent weeks, Merkel has consistently avoided questions about easing the social and economic standstill in the corona crisis. The Chancellor urged patience, even as the opening debate before Easter grew stronger. Now Merkel is looking ahead, albeit with caution.

“What we have achieved is an intermediate success,” she said in a press conference on Wednesday evening. “And I emphasize: It is a fragile interim success.” Merkel agreed with the Prime Ministers of the federal states during the day: Most of the drastic restrictions in everyday life and with fundamental rights remain in force at least until May 3. But economic life is slowly starting up again, and many retail stores will soon be able to open again.

The Chancellor and the Prime Ministers had to make a difficult trade-off decision. There was no shortage of advice from experts. On the one hand, the Robert Koch Institute (RKI) and a number of epidemiologists warned against loosening the measures too early – even though the number of new infections registered is falling noticeably. However, the RKI sees a risk of relapse: the coronavirus could spread faster again and overload the hospitals.

Many patients then threatened to die from severe respiratory illness. On the other hand, the social and economic consequences of the lockdown, which has been going on for a month, have increasingly come into focus.

“Economic power costs every week”

At the request of the government, professors from various disciplines at the National Academy of Science Leopoldina looked beyond the epidemiological perspective. They recommended a “gradual return to normal”, especially schools should reopen as soon as possible.

The report had fueled expectations among entrepreneurs that the shutdown could be eased more quickly. The federal government is reluctant to open it too much. “We have to live with the virus as long as there are no drugs and, above all, no vaccine,” said Merkel. One wants to “allow more public life” again in small steps, but one has to “exercise extreme caution”.

Economists fear an additional burden on the economy. “Every week, further restrictions cost economic strength,” said Lars Feld, head of the business operations, the Handelsblatt. With the extension of the contact bans, the gross domestic product will probably shrink by more than five percent in 2020.

In recent days, the federal and state governments have been struggling over what should happen after April 19. So far, the coming Sunday has been the preliminary end date for many of the measures taken in the corona crisis.

On Tuesday Chancellor Minister Helge Braun (CDU) advised the heads of state chancellor of the federal states on the basis of which the Corona Cabinet in Berlin then drafted the resolution. The plans were changed in a few points in the more than three-hour video viewing by Merkel and the Prime Minister. The measures are to be reviewed every two weeks, the next deadline is April 30th.

The Corona timetable for the next few weeks now looks something like this:

Contact restrictions remain

The contact restrictions that have been in effect since mid-March should now apply at least until May 3. “The most important measure remains in the coming time, to keep your distance,” says the decision. Citizens must keep a minimum distance of 1.5 meters. More than two people may not be together in public – unless they belong to a family household.

Merkel made it clear: “Violations of this will continue to be punished by the regulatory authorities.” The Germans must continue to refrain from private trips and visits, including from relatives. In addition, the federal and state governments recommend wearing face masks in local public transport and in retail. There should not be a general nationwide mask requirement. Major events are to be prohibited until August 31 because of the corona pandemic.

School lessons from May at the earliest

School operations in Germany will gradually resume on May 4th. It starts with graduation classes, classes that will take exams in the coming year, and the top elementary school classes. The Kultusministerkonferenz der Länder (KMK) is to work out a concept “how teaching under special hygiene and protective measures, in particular taking into account the distance requirement due to reduced learning group sizes, can be resumed overall”.

In addition to the lessons, the breaks and school bus operations should also be taken into account. The emergency care in the daycare centers is to be expanded to include other professional groups to enable parents in central economic areas to return to everyday work. Merkel said that she understood the difficult situation of many parents. However, infection protection must be observed in order to save lives.

Retail perspective

The federal and state governments have agreed that shops up to an area of ​​800 square meters can open again next Monday. The opening is tied to requirements for hygiene, to control access and to avoid queues. Regardless of the retail space, car dealerships and bookstores could open. According to the ideas of the federal government, cultural institutions such as libraries and archives as well as zoos and botanical gardens should be accessible again under certain conditions. Hairdressers could offer their services again from May 4th if they comply with protective regulations. Restaurants, bars and pubs should remain closed as before.

Start up the economy slowly

The Federal Government’s goal is to enable industry and small and medium-sized companies to “work safely as far as possible” even in the pandemic. However, economic activities with considerable public traffic should remain excluded. Employers would have a special responsibility for their employees to protect them from infections. That is why every company in Germany should implement a hygiene concept based on an adapted risk assessment and company pandemic planning.

Businesses are encouraged to enable homework wherever possible. In addition, the federal and state governments want to support the economy in restoring disrupted international supply chains.

Affected companies should contact contact points that will be set up by the federal and state ministries of economy. “At the political level, these are intended to help ensure that the manufacture and delivery of the required supplier products, where possible, is smooth again,” says the draft resolution.

Nicola Leibinger Kammüller, head of the mechanical engineering company Trumpf, feels the compromise between maintaining the protective measures and gradually returning to normal is “right and responsible”. “The federal and state governments do not make it easy for themselves when making their decisions, but try to take many aspects and social groups into account,” she told the Handelsblatt. Restoring parts of the economy would be important to mitigate the “already singular consequences of the standstill”.

Prepare for the next pandemic period

Germany has to learn to live with the virus. Because it will probably take a year before a vaccine is available. Continuing the shutdown for so long would risk a collapse of the economy and society – a scenario of this kind has been played out by the Federal Ministry of the Interior. In the house of Interior Minister Horst Seehofer there is therefore talk that Germany urgently needs to develop “pandemic resilience”, that is, resistance to the wave of diseases.

However, the structures required for this are still under construction, which is one of the reasons why the corona barrier cannot currently be loosened. A gradual normalization of everyday life requires that new infections can be quickly identified and contained.

  • First, they should local health authorities will be strengthened. In the future, a team of five people per 20,000 inhabitants should take care of Corona patients and follow up their social contacts. In particularly affected areas, “the Bundeswehr can also help with trained personnel”, the Federal Government offers in an internal resolution proposal. The aim of the federal and state governments is to “understand all infection chains every day and to interrupt them as quickly as possible”.
  • Second, the federal government and the federal states Tracing technology compliant with data law. In future, citizens should be notified via cell phone if they are or were at risk of infection. However, a finished program that could be installed on the smartphone is not yet available. It should not be ready until the end of April.
  • Third, they should Test capacities of currently 650,000 are being expanded. The federal government promises to purchase additional test equipment. However, since the world market is fiercely competitive and the necessary reagents could become scarce, test materials are also to be increasingly produced in Germany.

The same applies to the manufacture of medical protective equipment. In Germany, “production capacities for the corresponding products are being built under high pressure,” emphasizes the Federal Government. The overriding goal is “to provide the health care facilities with full care and medical protective masks that protect the wearer from infection”.

The intensive care beds in hospitals are also to be expanded. Ultimately, the federal government is clear that the corona crisis can only be overcome if vaccination protection is in place. “A vaccine is the key to a return to normal everyday life,” she emphasizes. The state wants to support pharmaceutical companies, health start-ups and international organizations in the development.

More: “It is a significant step forward that there is now a broad debate,” said Ifo boss Clemens Fuest.


Gerald Haug is the voice of science

Dusseldorf Usually, the scientists at the Leopoldina take a lot of time. It takes a year or two for a working group from the time-honored scholarly society from Halle an der Saale to present a result, such as the aging of society or the interdisciplinary analysis of climate goals. But what is normal in times of the corona crisis?

Since Gerald Haug took up his new position as president six weeks ago, the Leopoldina has already published three ad hoc statements on the pandemic. Easter Monday’s document recommends a gradual relaxation of the lockdown – and could have a direct impact on the decisions of Chancellor Angela Merkel and the country heads who meet this Wednesday.

This brings an institution that has so far remained in the shadow into the public eye, which was founded in 1652 by four doctors as the “Academy of Natural Scientists”.

Since Emperor Leopold I guaranteed her “complete freedom from censorship” in 1687, society has borne his name. In 2008 the Leopoldina was named “National Academy of Sciences”, employing 90 people in Halle and Berlin.

It is not a university or runs laboratories, but is an intellectual think tank that represents German science abroad and is intended to provide independent advice to politicians and the public. 1600 scientists from more than 30 countries are united here.

The Presidium selects new members who must excel in scientific achievements. 180 Nobel Prize winners can be found in the annals, 30 among the current members. Albert Einstein was just as much a part of the elite circle as Marie Curie or Charles Darwin.

Haug is a field researcher

Gerald Haug has also been a Leopoldina member since 2012. Born in Karlsruhe, he is a climatologist, marine geologist and paleo-oceanographer. Haug’s focus: research into sediment cores.

After drilling on the Venezuelan coast, he was able to demonstrate historical periods of drought that could explain the decline of Mayan culture. Although Haug quickly becomes seasick, he has been on research ships in the Indian Ocean or on deep-sea drilling in the Caribbean.

He is a field researcher who has taught in Los Angeles and Zurich and has headed the climate geochemistry department at the Max Planck Institute for Chemistry in Mainz since 2015. In his work, he constructs past climates. But the corona crisis is about the future, looking ahead.

Haug, who turned 52 on Tuesday, does not hide the fact that he is a stranger. Rather, he sees himself as a moderator. He published the ad-hoc statement together with 25 colleagues, including Ifo boss Clemens Fuest and the business man Lars Feld.

In the 19-page paper, a mask requirement for buses and trains is proposed, the gradual opening of schools. “Whenever the distance rules can be adhered to with the help of masks and hygiene, things can go on,” said Haug on Monday in the “Daily Topics”.

Restaurants with the appropriate seating could open again, stadium visits or parties would have to be avoided. Haug does not see the statement as a roadmap that must come from politics.

“He is a thoroughbred scientist, not an administrator”

Nevertheless, the document carries weight: Merkel said before Easter that she would also use the “very important study” of the Leopoldina to orientate the way forward. For her, the academy is the “voice of science”, as she once explained.

Even the microbiologist Jörg Hacker had geared the Leopoldina to more political advice in his ten years in office. Successor Haug is now to help the breakthrough.

“He is a thoroughbred scientist, not an administrator,” says chemist Robert Schlögl, who also worked on the ad hoc paper. “Haug is a driver, has demanded the necessary discipline from all of us.” There were 30 variants of the document, and the wording was fine-tuned to the end.

The Leopoldina itself also suffers from the corona crisis: Haug has had to postpone or cancel all events by the end of June, most of his employees are in the home office. Conferences with the other national think tanks: they only take place by video. Haug wants to continue to provide scientific support for the pandemic. At least until a vaccine is found.

At the time of his inauguration, he announced “pointed debates”. The academy must be able to deal with socially burning issues within a few weeks. Haug quickly proved that she can do this.

More: The Leopoldina research community has outlined options for an exit strategy from the corona lockdown. Criticism is sparked by their proposals for digital data collection.