Because of Corona: German citizens step on the brakes when consuming - biggest slump in 70 years

The corona pandemic has severely slowed private consumption in Germany.

According to a study by the IW, spending on visits to restaurants or the cinema fell dramatically in 2020. 

Cologne - In the Corona * year 2020, according to calculations by the Institut der Deutschen Wirtschaft (IW), consumers in Germany spent an average of at least 1250 euros less on private consumption than in the year before the crisis.

In total, this corresponds to a decrease in consumer spending by 116 billion euros, according to a calculation published on Tuesday by the employer-related research institute.

Compared to 2019, consumption fell by 6.1 percent - more than it has been in 70 years.

For the first quarter of 2021, the researchers put the consumption shortfall at a further 40 to over 60 billion euros.

Consumer spending: spending on clothing and shoes plummeted

The authors of the study emphasize that German citizens would have bought very few short-lived consumer goods such as clothing or shoes in 2020. The purchase of durable consumer goods such as cars or furniture also declined in the course of the first lockdown, but demand in the second half of 2020 increased by five percent compared to the previous year - which, according to the study, was also due to the temporary VAT cut.

The slump in services was many times higher.

In 2020 as a whole, the decrease totaled 78 billion euros.

That is more than two percent of the German gross domestic product.

"The state-decreed closure of body-related services, restaurants, hotels, leisure and event facilities have made many consumer wishes impossible," said IW scientist Hubertus Bardt.

The leading economic research institutes announced last week that consumers had accumulated purchasing power of around 200 billion euros.

If they were to put this money into consumption when the corona crisis came to an end, the upswing expected for the summer could be much stronger than expected.

Consumer spending: Economists dampen hope of a rapid turnaround

The employer-friendly IW is now dampening these expectations. Despite the accumulated purchasing power, citizens are currently still holding back in surveys on consumer mood. The respondents' assessment of whether this was a good buying opportunity slipped back into the negative index area in the first quarter of 2021. 43 percent wanted to save their excess income, normally it is less than 30 percent. In addition, only a third of those surveyed stated that they currently plan to spend on vacation - usually 45 to 50 percent.