How Will the Coronavirus Affect Germany’s Economic Future?

Binding Plan to Ease in Stages the Most Popular Option; Opposition to Immediate Easing

With regard to the economic situation in Germany going forward, a binding plan to ease restrictions in stages based on the actual incidence rate is the option rated most positively by participating economists. Around 55 percent view this strategy as “fairly positive” or “very positive.” Barely one-quarter of respondents rate this strategy as “fairly negative” or “very negative.” In second place comes a strategy that has strong parallels with the “NoCovid” approach and advocates easing restrictions only once regional health authorities can reliably and quickly trace new cases of infection. Around half of participating economists view this strategy as “fairly positive” or “very positive.” By contrast, 30 percent rate it as “fairly negative” or “very negative.” Easing of restrictions for retail when the measured incidence rate falls below 35 was just as positively received as more extensive lifting of restrictions: including for cultural institutions, restaurants and catering, and the hospitality sector with the same incidence rate. In each case, 43 percent of participating economists consider the strategies to be either “fairly positive” or “very positive.” At the same time, the economists reject more extensive easing of restrictions beyond the retail sector. Immediate and comprehensive lifting of restrictions met with strong disapproval. Although just over 10 percent of participating economists view this strategy as either “fairly positive” or “very positive,” around one-quarter rate it as “fairly negative” and almost half rate it as “very negative.”

To effectively combat the coronavirus pandemic, moreover, participating economists call for massive expansion of the testing strategy, more targeted protection of at-risk groups, and a turning away from incidence rates as the sole criterion for opening up of the economy.

Lowering of Incidence Rate from 50 to 35 Divides Economists

When it comes to the lowering of the measured incidence rate from 50 to 35 before there can be further easing, almost half rate the policy positively, while 41 percent rate it negatively. One-fifth of economists consider the reduction to be “very positive” and 29 percent think it is “fairly positive.” They justify this with the better traceability of chains of infection and the high degree of uncertainty surrounding future infection levels on account of the virus mutations. Around 20 percent view the reduction as either “fairly negative” or “very negative.” They think that the new incidence value is arbitrary and unfounded and therefore the reasoning obscure, and that its adoption lacks a long-term perspective. Moreover, they attribute the falling support for the measures among the public to these reasons. Almost 10 percent of participating economists feel ambivalent about the lowering of the incidence rate before there can be further easing of restrictions.

Strong Approval for Expansion of Testing Strategy

The announced expansion of the testing strategy was very popular among participating economists: 52 percent are “very positive” about the prospect of additional testing, while just over one-quarter are “fairly positive.” They think that a better overview of infection levels through increased testing would allow more extensive easing of restrictions. As such, the testing strategy is an important component in the battle against the pandemic. Some rate the testing strategy to date as insufficient at least in part. For many, the expansion of testing is coming too late. One-tenth feel ambivalent about the measure and caution against over-optimism. A small proportion of participating economists see the expansion of the testing strategy as “fairly negative” (4 percent) or “very negative” (2 percent).

Consequences of Immediate Reopening Unclear for Businesses

Around 35 percent of participating economists think that an immediate and full-scale lifting of the lockdown would reduce the number of companies that become insolvent. This would allow cash to flow into the businesses and replenish their diminishing capital reserves. However, 43 percent are of the opinion that this is not the right strategy, since the negative effects of a looming third wave would do greater damage to the companies. The large proportion of “don’t know” answers (22 percent) indicates a high level of uncertainty.

Premiums for Additional Vaccine Doses Viewed Positively

The participating economists approve the policy of paying premiums to vaccine manufacturers for additional vaccine doses to be delivered more quickly: 45 percent are “very positive” about the premiums, and just over one-fifth are “fairly positive.” They think that paying the premiums would create incentives to build up additional production capacity for vaccines. Moreover, the benefits of an additional vaccine dose would outweigh the costs. Some 16 percent feel ambivalent about the measure, as the profits in the sector are already high; although there is nothing wrong with offering incentives in principle, doing it here could see Germany accused of pursuing a nationalistic course. Finally, 9 percent of participants rate the payment of premiums as “fairly negative” and 5 percent view them as “very negative.” As reasons for their disapproval, they argue that production cannot be increased in the short term and that premiums would lead to (global) fighting over vaccine distribution.

A Majority Reject the Communitization of Patents

Almost one-third of participating economists define their attitude to the communitization of patents in conjunction with compensation payments to patent holders with the aim of accelerating vaccine production as “fairly negative.” One-quarter go further and describe it as “very negative.” They think that the communitization of patents would disincentivize investment in research and development in the long term. In contrast, 11 percent of participating economists view the policy as “very positive.” A further 13 percent view it as “fairly positive,” citing their hope that the measure could help alleviate production bottlenecks. Just over one-tenth feel ambivalent about the communitization of patents.