GERMANY is facing an economic crisis as the nationwide lockdown costs the EU's largest economy €1.5billion per week, according to the latest forecasts, as thousands of firms warn they face going under unless restrictions are eased. Germany is embroiled in a third COVID-19 lockdown with Chancellor Angela Merkel extending measures into March. Analysis by the Munich-based Institute for Economic Research (Ifo), predicts the German economy is losing €1.5billion per week due to business being closed. Union leaders have warned thousands of firms risk going bankrupt unless measures are eased, and have called for a clear roadmap out of lockdown. President of the skilled crafts and trade body, Hans Peter Wollseife said there would “dramatic economic consequences” if firms did not open soon. Speaking to the Rheinische Post, he said: "Otherwise it would have dramatic economic consequences.
“Companies dying by the thousands must be prevented, not least because it is our companies and their employees who generate taxes and levies that the state will need to finance the way out of the corona pandemic." The German Chamber of Commerce and Industry (DIHK) conducted a survey of more than 30,000 companies. It found 33 percent of travel agents expected further sales losses this year, compared to 2020, with 31 percent at risk of bankruptcy. In the catering industry, 39 percent of firms expected to make losses – with 19 percent at risk of going bust. Meanwhile, in the retail sector 40 percent of business were forecast to be in the red and seven percent at risk of bankruptcy. The Industry and Employers' Association has criticised the German government for the lack of an exit strategy. The union said: “They also lack a planning horizon. A light at the end of the tunnel cannot be seen. "We therefore strongly advocate a concept for easing restrictions.” In its forecast, the Ifo did point out the current weekly losses were considerably less than during the first wave of the virus last year as firms have adapted to remote operations.
Last spring, the institute had estimated the weekly losses at around €25billion. Timo Wollmershäuser, head of economic forecasts at the Ifo, pointed out firms in the hospitality sector would be most affected. He said: “Economic output is only likely to slide into the red in the consumer-related service sectors in which social contacts are an important part of the business model.” The IFO estimate the economic output in the affected sectors in the first quarter of 2021 will be around £17.5billion (€20billion) lower than in the fourth quarter of 2019, before the outbreak of the pandemic. The Ifo chief was more upbeat about the construction sector which has stayed open during the lockdown. Mr Wollmershäuser added: "Since the industrial and construction sectors continue to run well, the gross domestic product should not decline at the beginning of the year, but stagnate.” Ifo President Clemens Fuest urged the German government not to open up the economy right away. He said: "So if we open now and people are afraid of being infected, they still won't go to the restaurant.”