Emergency Brake Measures Show Way Out of Coronavirus Crisis

National infection rate falls below 40 

Germany’s 7-day Covid-19 infection incidence rate has fallen to 35 per 100,000 population (June 1) according to the Robert Koch Institut. The incidence rate has been steadily falling since April, with incidence rate dropping below the 50 threshold in May for the first time since October, 2020. 

Emergency brake and vaccination rollout a success

The development represents a significant achievement for Germany after the introduction of “Federal Emergency Brake Regulations” where the 7-day incidence rate exceeds 100 on three consecutive days. The nationwide lockdown and restriction measures that have helped bring the infection rate down are now being relaxed as some semblance of normality returns to the country. At the beginning of June, almost 45 percent of the population have already received their first Covid-19 vaccination, with more than 17 percent already fully vaccinated. Social distancing, minimization of contact and the wearing of surgical or FFP2 masks remain the most important measures to contain the infection rate. From June 7 onward, all Germans aged 12 years of age and older will be eligible to receive a vaccination without further constraints.  

Gastronomy and tourism restrictions being relaxed

Federal states across Germany have announced a relaxing of coronavirus lockdown restrictions as a result of the falling infection rates. These include a reopening of cafes and restaurants for outdoor service, with many states now also considering a resumption of indoor gastronomy. Restrictions affecting the tourism trade are also being relaxed, with Hamburg, for example, allowing a resumption of hotel, guesthouse, holiday apartment, and campsite trade – subject to provision of a negative Covid-19 test for those guests who are not fully vaccinated or recovered from the virus – from June 1, 2021. Other Federal States are expected to ease restrictions shortly. 

Confidence returning to the economy with exports up

The mood in Germany’s boardrooms has also improved, with the ifo Business Climate Index rising to 99.2 points in May – the highest level since May 2019. Companies across the country are more satisfied with their current business situation, and are generally more optimistic about the months ahead. Order books in the manufacturing sector are once again filling up, with companies also expecting prices to increase. Wholesalers expect to benefit from the positive developments in the manufacturing sector, with trading companies generally more satisfied with their current business situation. More than 35 percent more goods were exported from Germany to countries outside the European Union for the period April 2020 to April 2021 according to provisional Federal Statistical Office results. The service sector recorded its highest value since February 2020, with optimistic expectations set to improve with the foreseen relaxation of Covid-19 measures in the hospitality and tourism sectors. 

German labor market in recovery

The first signs of a comprehensive improvement in the labor market also emerged in May according to the Federal Employment Agency. Federal Statistical Office data shows that the unemployment rate decreased by 0.1 percentage points to 5.9 percent from April to May – equivalent to an 84,000 drop. The number of people furloughed also fell, with current date on claims made by March 2021 showing payments being made to 2.61 million employees. This is the first fall in short-time work claimants since November of last year when the renewed Covid-19 containment measures entered into effect. In May, 654,000 jobs were registered with the Federal Employment Agency, reflecting a seasonally adjusted increase of 19,000 jobs. Increased labor demand is also recorded in the agency’s job index, which rose by four points to 108 points in May 2021 – 17 points higher than the rate in May 2020.