Economist on pandemic policy: "The government is acting very hesitantly"

Mr. Kooths, do you think the federal government’s planned measures to ease the pandemic are proportionate?

Johannes Pennekamp

Responsible editor for economic reporting, responsible for "The Lounge".

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The government is still acting very hesitantly.

She seems intent on always being on the safe side.

She is finding it extremely difficult to follow the example of other countries that are long on the way back to normality.

This also has to do with the poor data situation in this country - if you have poor visibility, you can only tentatively advance.

Last but not least, the economic consequences of the measures must be considered, and I am particularly critical of the quarantine rules.

Why?

The loss of work is currently higher than ever due to the quarantine regulations, which is a completely new dimension.

We are currently calculating how much this will slow down economic development.

It turns out that this is a significant effect.

The associations of paediatricians have just called in the FAZ for the quarantine for children to be canceled because they are only at little risk.

Do you agree?

I am not a doctor, but I also hear the opinion of experts.

It should not be forgotten that the current rules are causing considerable harm to children, including because they miss school, suffer from psychological problems and do not get enough exercise.

In the end, we made the children a vulnerable group in the first place.

It is a mystery to me why the Federal Minister of Health just brushes that off the table and only focuses on the mono-target of fighting infection.

Back to the economy.

The retail sector in particular is weak at the moment, and the 2-G rule is now to be lifted there.

Is that right?

This is overdue.

Measures are now being lifted, the effect of which was unclear anyway.

My impression is that this is more of a face-saving retreat than an evidence-based decision.

If retail were a corona hotspot, it would have had to hit masses of supermarket workers.

Luckily that is not the case.

Overall, I lack the scientific evidence for this approach.

Instead, the worst case scenario is always assumed for the pandemic, which assumes maximum risk aversion in society.

So it's surprising that we have so many lottery players in the country, people obviously tick differently.

At the end of 2021, German economic output shrank.

When is it going up again?

From spring I expect strong growth rates again after this rough winter half-year, in which the infection process set back the service sectors in particular.

Gross domestic product is likely to shrink again this quarter.

But that is not a recession in the sense of weak demand - on the contrary, there are strong upward forces and pent-up purchasing power of 215 billion euros.

What happens to all the money?

The normalization of purchasing behavior will provide a powerful boost, and consumers will have more money.

I am convinced that there is a risk of the economy being overstretched at the moment - this too is a failure to achieve the stability goal - and that in a situation in which inflation is already very high.

At the same time, are there supplier and staff bottlenecks that are likely to slow down the recovery?

The withdrawal of the infection control measures will immediately ease the stress on the service providers.

We are assuming that the supply bottlenecks in industry will be gradually overcome over the course of the year.

Personnel bottlenecks remain the biggest obstacle in the medium term.

Many employees have now reoriented themselves.

For example, if employees have switched from the catering trade to better-paid jobs, it doesn't have to be bad for the economy as a whole.

But that's little consolation for the restaurants and bars that were affected.

Is it now time to end the short-time work and bridging aid for the economy?

Yes, the aid should be phased out now.

Is there a risk of a wave of insolvencies, which has not happened so far?

So far there have even been fewer bankruptcies than usual.

I believe that the wave of bankruptcies is yet to come.

Insolvencies often occur during recovery phases, because the weak companies then run out of steam.

Unfortunately, companies were also rescued by the state that no longer had a viable business model - that remains to be seen.

The overall picture also includes business closures that have existed and will exist that are not included in the insolvency statistics, but of course still take place.