Man and woman with face mask. Man and woman with face mask. | © GettyImages/martin-dm

Corona Crisis and Germany

The global coronavirus (Covid-19) pandemic has far-reaching implications for business and the economy. Germany Trade & Invest is working for you during this difficult time - with regular information updates and answers to your questions about the potential effects for your project in Germany.

With major restrictions placed on movement and travel in place across the world, many planned events and trade fair visits have been cancelled or postponed. Although we are not able to meet you in person for the time being, Germany Trade & Invest will continue to provide its full portfolio of “virtual” services during the current crisis. All of our industry teams remain available to provide ongoing support – in Germany and around the world.

Video: Corona and Germany - The First Three Months

A swift targeted health response and quick, non-bureaucratic assistance for businesses large and small - those are two reasons Germany has thus far weathered the corona crisis comparatively well. But what might be coming in the future for post-lockdown German business? We take an initial look.

Where border checks are still in place

Germany has introduced entry and travel restrictions from and to its neighboring countries. Check our map for current regulations.

Entry Regulations, Border Controls, Travel Restrictions

A number of restrictions on entry to and travel within Germany as well as onward transit from the country have been introduced to safeguard public health since the outbreak of the coronavirus.

Germany’s Federal Foreign Office has prepared important information relating to entry and travel restrictions, behavior when in Germany, and transit through other countries. 

Germany has also introduced travel restrictions for entries from outside the Schengen area. All corresponding entries from non-EU-citizens and citizens of non-Schengen states by plane or ship are affected.

The temporary checks at the land borders with Austria, Switzerland, France, Luxembourg, and Denmark were relaxed on May 15. Checks at at the borders with France, Austria and Switzerland will continue until June 15, 2020. The German Government is also willing to end checks at the border with Denmark and is currently pursuing a joint decision with the Danish Government.

National Guidelines to Slow the Spread of Coronavirus 

On May 6, 2020 the federal government announced that lockdown restrictions will be further eased. Contact restrictions, with a minimum distance requirement of 1.5 meters and the use of masks in public spaces – especially in shops and on public transport - will remain in place until June 5, 2020. 

Under strict hygiene and protective conditions, shops of all sizes will be allowed to open, recreational sport will again be permitted and pupils will gradually return to school until the summer holidays. Members of two households are also now permitted to meet.

All details of the reopening phase will be set at federal state level. However, the federal states and the federal government have agreed upon an emergency mechanism. If new infections rise to above 50 people cumulatively per 100,000 in a district within seven days, the responsible federal state has to reimpose restrictions. 

For detailed information, please refer to the FAQs provided by the Federal Ministry of Interior.

Financial Support for Business

Germany’s government has moved swiftly and decisively to confront the potentially devastating effects of the coronavirus pandemic on the economy.

The country’s economy is in a strong position to introduce measures supporting the economy over a prolonged period. By providing businesses with sufficient liquidity, the government measures will help ensure that enterprises emerge from the crisis intact.

The Ministry of Finance and Federal Ministry for Economic Affairs and Energy have unveiled a joint assistance program and tax policy measures totaling billions of euros. The package of measures and instruments has been put in place to protect the employment market and enterprises of all sizes in all sectors.

Liquidity Aid Loan Programs

The federal development bank KfW has expanded and eased access and terms on two existing loan programs:

  • the ERP-Universal Start-up Loan
  • the KfW-Entrepreneur Loan

KfW has introduced a variety of special programmes to suit companies of different sizes and ages. These programmes include generous terms and conditions on consortial financing for larger projects, as well as emergency liquidity aid for SMEs, micro-enterprises and freelancers/self-employed persons experiencing financial difficulties as a result of the corona crisis.

Please refer to the KfW website for details on loan program conditions. Applications for all these can be made through high-street banks.

At the same time, both federal and state governments are setting up a variety of aid programs to support companies in Germany. The range of services is continuously being updated and expanded. The Federal Ministry for Economic Affairs and Energy provides an overview of all state programs (so far in German only). If you have any questions, please do not hesitate to contact us.

More Flexible Rules for Short-Time Allowance Schemes

The Federal Employment Agency pays the short-time allowance as partial compensation for a loss of earnings caused by a temporary cut in working hours. This reduces the costs faced by employers in the context of employing workers, and enables companies to continue to employ their workforce even in the event of a loss of orders. In other words, short-time allowances help to prevent dismissals.

Currently short-time allowances schemes can be granted on a more flexible basis for a limited period until December 31, 2020. For instance, companies are eligible to apply, if 10 percent of the employees are effected by shorter working hours. Moreover, social security contributions which have to be paid solely by employers for employees working short-time are reimbursed in full.

Tax Policy Measures

Tax measures improving companies’ liquidity situations have been decided. For instance, options for deferring tax payments and reducing prepayments will be enhanced. Enforcement rules will also be adapted - there will be no foreclosures or late payment fines, if the debtor of a pending tax payment is directly affected by the coronavirus.

Maintaining Supply Chains in the EU

European supply chains are maintained through an extensive network of freight transport services, including all modes of transport.

In order to ensure the proper functioning of the EU’s internal market, the EU has requested member states to immediately designate all of the relevant internal border-crossing points of the trans-European transport network and additional ones – to the extent deemed necessary – as “green lane” border crossings.

Green Lane Border Crossings

These green lane border crossings should be open to all freight vehicles – whatever goods they are carrying. Crossing the border, including any checks and health screening, should not take more than 15 minutes.

The European Commission has presented a practical guide to ensure continuous flow of goods across EU via green lanes. Moreover, the Commission has also set up a network of national contact points and a platform to provide information on national transport measures taken by member states in response to the coronavirus. 

Economic Developments

The coronavirus outbreak in Germany has brought an abrupt end to the positive economic start to the year. The country’s economy must address unexpected challenges.​

Economic Forecast Germany 2020-2021

Due to disrupted supply chains and weak global trade, the impact of COVID-19 and its restrictions will affect domestic and foreign investments. According to the European Commission, Germany’s GDP is expected to fall by 6.5 percent in 2020. Other large European countries such as France, the UK, Italy, and Spain will see an even bigger decline in 2020.

In 2021, large catch-up and carry-over effects should buoy the German economy, with a projected GDP increase of around 6 percent allowing Germany to reach its pre-crisis level by the end of the year. 

Countering the Crisis - Record Package of Financial Support Measures

Germany’s government has moved swiftly to counteract the worst effects of the crisis, introducing a far-reaching package of financial measures to safeguard health, jobs and the economy. The record aid package includes a supplementary government budget of EUR 156 billion to absorb the immediate consequences of the crisis. The complete program of help measures – including guarantees and subsidized KfW bank loans – planned represents EUR 1.2 trillion in total. By moving quickly and decisively to mitigate the worst outcomes of the crisis, Germany’s government is creating the conditions to ensure that businesses – of all sizes – emerge from the crisis intact. 

Germany was one of the safest investment locations worldwide before the global coronavirus pandemic. The country’s strong and stable economy now puts it on a strong footing to deal with the current crisis. The record financial aid package announced – with further measures foreseen as and when required – is a sign of the German government’s commitment to ensuring that the country maintains its proud position.

Global FDI Perspectives

A global recession now seems certain, with economic recovery only possible when the virus can be effectively contained. According to the OECD, a sharp slowdown in world growth is expected in the first half of the year as supply chains and commodities are affected, tourism falls away and business confidence falters.

UNCTAD reports that the outbreak and spread of Covid-19 will negatively affect global foreign direct investment (FDI) flows in the period 2020-2021. Downward pressure on FDI will be in the range of -30 to -40 percent according to new forecasts. Developed countries in particular will feel the effect of this downturn as a result of their dependence on global supply chains.

Sectors expected to experience the greatest decline in FDI levels include aviation, tourism, entertainment, retail trade, and luxury goods. The automotive, consumer goods and IT sectors should experience minimal decline, with biotechnology, e-commerce, digital technologies, and healthcare potentially recording FDI increases according to some forecasts.

go to top

Log in

Please log in on this page with your log-in details.