The EU’s largest economy is preparing for an economic downturn as Management consulting company Roland Berger said millions would be left out of work. While a survey of 7,000 German companies by Munich Ifo Institute found a fifth (21 percent) sees their own existence threatened due to the coronavirus crisis.
Free Democratic Party leader Christian Lindner said the coronavirus crisis had acted like a “fire accelerator” to Germany’s economic woes, saying: ”We are in a very critical situation”.
Meanwhile, the survey found travel agencies and tour operators in Germany are worried about their future with 85 percent saying their existence is at risk.
While, 76 percent of hoteliers fear for their company.
However, it is good news for the chemical industry, with only six percent of companies concerned about their future and just two percent in the construction industry.
Economic experts warned of an “insolvency wave” in the next coming months.
Roland Berger warned of the long-lasting damage to the German economy, telling BILD: “There is a risk that we will have between four and five million unemployed.
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According to the Employment Agency (BA), the number of unemployed stood at 2.8 million in June – around 637,000 more than a year earlier.
Ifo boss Clemens Fuest warned, “the number of unemployed will rise to around three million in the third quarter”.
It comes after the EU Commission warned Germany would be hit by a downturn of -6.3 percent from -6.5 percent forecast in May and next year’s rebound.
The report also warned the eurozone economy would drop deeper into recession this year and rebound less steeply in 2021 than previously thought, with France, Italy and Spain struggling the most due to the COVID-19 pandemic.
The EU executive said the 19-nation single currency area would contract by a record 8.7 percent this year before growing by 6.1 percent in 2021.
In early May, the Commission had forecast a 2020 downturn of 7.7 percent and a 2021 rebound of 6.3 percent.
Meanwhile, German Chancellor Ms Merkel will meet with Spanish Prime Minister Pedro Sanchez ahead of a July 17-18 summit to discuss a planned European Union recovery fund.
Spanish government spokeswoman Maria Jesus Montero said: “Spain’s future is at stake in the coming days,” regarding the negotiations over the fund, from which Spain hopes to receive around €140 billion.
Additional reporting by Monika Pallenberg