The largest economy in the EU has already lost more than 20%.
I'm really not an economic expert, so I research what the trends are, what the experts say and then mix that with my rather sceptical view of humanity's reasonable actions.
The Gesellschaft für Konsumforschung, GFK, is one of the leading economic analysts in Germany. I am not writing anything about Italy or France here. Nor does Merkel carry any weight here. She is rather, as usual, with her strangely calm way of speaking, suitable to calm and comfort the people. It is the average German citizen who is worried. And when they do, other EU member governments should should do too...
The reality in Germany looks like this:
The GfK "consumption barometer", which measures the buying mood of consumers, has fallen to a record low. The study, entitled "Corona shock: consumer climate reaches historic low" and it describes:
1. consumers expect recession
2. income expectation in free fall
3. consumption is carried along by income expectations
Production shutdowns, shop closures and the catering trade have brought economic activity to a virtual standstill in many areas. In addition, interrupted supply chains hinder production in many areas of industry. Many companies are making use of the possibility of short-time working to avoid redundancies. Nevertheless, it will not be possible to prevent a rise in unemployment in the further course of this year. The resulting fear of job losses is weighing on sentiment.
While the economic outlook is currently still getting off lightly given the severity of the crisis, income expectations have suffered an unprecedented slump. Compared with the previous month, the indicator lost 47.1 points and now stands at -19.3 points. Never before since the start of the monthly survey of consumer sentiment in 1980 has a higher monthly loss of income expectations been measured.
One does not need a mathematical genius to calculate the consequences of the loss of about 20+% of the current VAT of 20% in terms of loss of tax revenue. When unemployment is rising and rich individuals run for the hills (or tax heavens), were is the money supposed to come from?
According to the Federal Employment Agency (BA), just under one in three of the 2.2 million companies with at least one employee subject to social insurance contributions has registered for short-time work. More jobs have already been cut in the service sector than at the height of the financial crisis recession in April 2009. In the manufacturing sector even before Corona, Daimler Benz, Mercedes, had decided to cut up to 15,000 jobs. VW was already pushed into the defensive thanks to strange methods of a lobbyist NGO, "Deutsche Umwelthilfe".
But it is by far the largest employer, the medium-sized companies that are now being led to the slaughterhouse to be gutted by ominous tax avoidance hedge funds like Black Rock who will sell their patents and pension funds to the highest bidders.
The forecasts for the increase in unemployment from the current 2.3 million, which fluctuates between 700,000 and 2.5 million. increase, so to speak. This could lead to a total unemployment of 5 million.
The job index of the Federal Employment Agency (BA-X), an indicator for the demand for labour in Germany, fell by 20 points in March 2020, April has not yet been recorded and is due to be published on 30 April.
As of the fourth month in Corona short-time work, employees whose working hours have been reduced by at least half will now receive 70 and 77 percent, respectively. From the seventh month, the rates will increase to 80 to 87 percent. The reserves of the Employment Agency amount to almost 26 billion euros.
For me it is more than questionable whether the government's decisions will stabilise consumer demand. This is completely open because Corona will act as a booster for the use of artificial intelligence.
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