We know last year has been all about bad news - and we do not want to bring you more. Rather, as we head into the new year we want to reflect on the long term impacts of the Corona crisis on the economy. We often talk in detail about planning and being one step ahead on this blog, and we want to share some of the insights we have researched to best prepare you heading into 2021.
Yes, we have discussed the topic of Corona at length but what we know is that this crisis is not just about today, but the burden of the future and maybe even yours as a freelancer or self-employed person. Can we say all of these things will happen for certain? No, none of them are death or taxes! Ha! Should we all be aware of them?
Yes. Perhaps you know the saying of Benjamin Franklin who once wrote: “an ounce of prevention is worth a pound of cure”. In fact, he originally wrote this under an alias identity and contrary to popular belief he was not talking about health, or foreshadowing anything, he was in fact talking about fire safety.
In fact, what he said in full, and for the more existentially minded of you perhaps you see our point here: "In the first Place, as an Ounce of Prevention is worth a Pound of Cure, I would advise 'em to take care how they suffer living Coals in a full Shovel, to be carried out of one Room into another, or up or down Stairs, unless in a Warmingpan shut; for Scraps of Fire may fall into Chinks and make no Appearance until Midnight; when your Stairs being in Flames, you may be forced, (as I once was) to leap out of your Windows, and hazard your Necks to avoid being oven-roasted." So, we will let you mull over this existential thought, and carry on with assessing the long term effects on the economy of Corona.
As a note, we do of course want to talk about freelancers and the self employed but there is no discussing them in this context without looking at the entire macro ecosystem.
It is difficult to predict how long restrictions will last for private households and companies and what economic and social processes will result from them. This leads to consumer reluctance to buy and less investment by companies. As a result, overall economic demand will continue to decline.
In principle, it can therefore be assumed that there will be a decline in economic output of at least six percent in Germany this year. World trade is also likely to decline by 15 percent last year.
For comparison: in the financial and economic crisis of 2008/2009, world trade collapsed by around eleven percent in 2009. The economic consequences of the Corona crisis for both Germany and the global economy will therefore be much stronger.