The betting tips for the German entrepreneurship do not inspire optimism for the new year. On the contrary. Ο Marcel Francher, director of the DIW Institute for Economic Research, estimates that the crisis due to the pandemic will test German entrepreneurs or those who manage to come out of the strict measures unscathed lockdown, which will probably be extended beyond 10 January.
For 2021, the German government has decided to resort again to new record-breaking borrowing of €180 billion, but even this amount is not enough to keep businesses afloat and secure jobs. In fact, the Institute estimates that the coronavirus crisis will cost around EUR 400 billion.
«We underestimated the second wave of the pandemic»
This monstrous sum does not correspond to the somewhat optimistic scenarios of government representatives for a relative recovery of the German economy in the coming months. What went wrong? «We simply underestimated how strong the second wave of the pandemic is,» argues Marcel Fracher. «And I'm afraid we continue to be overly optimistic about 2021 because we don't realise that many entrepreneurs are now at the end of their tether, have no more reserves and face the spectre of bankruptcy.
We do not understand that the unemployment is growing again and that the global economy is not picking up at the pace we wanted. The risk continues to be enormous and I'm afraid we have to prepare for the the possibility of a further contraction of the economy, as long as it takes to bring the second wave of the pandemic under control.».
The scenario described by the German economist is terrifying, because it describes as inevitable what the German government is trying to prevent: the huge economic and social costs of possible business closures that will lead to an increase in unemployment.
«It will not reach €180 billion»
«Yes, the wave of bankruptcies is perhaps inevitable. The question is not if it will come, but when, because the state took two measures this year: First, it abolished for this year the mandatory bankruptcy petition to the district attorney, which the businessman had to file within a few weeks. And secondly, the state has strongly supported not all, but very many entrepreneurs. These two factors curbed bankruptcies, perhaps even led to their reduction in 2020. This shows that we still have a lot to look forward to. The question is when.».
Marcel Francher is of the opinion that in case the severe restriction measures continue until February or March, the €180 billion package will not be enough to cover the financial losses. The government will be forced to dig even deeper into its pockets. «I am not worried, the state has the resources, if it is going to ensure jobs and business viability, it will be amounts that have been invested properly.».
