Many German enterprises have seen their production and business activity decline amid the coronavirus pandemic. There are major differences between the individual sectors, however, as a representative survey of more than 30,000 firms in Germany reveals. Between January and February 2021, a total of 48% of firms reported a decline, 38% no change and 14% an increase in business activity as a result of the coronavirus pandemic. “Broken down by sector, restaurants, transportation and warehousing and other services sectors were particularly hard hit by the effects of the pandemic”, according to the Bundesbank’s latest Monthly Report.

The survey of firms conducted on the Bundesbank’s behalf aims to improve the general information base on assessments and expectations in the German business sector. “Findings on the current situation of enterprises in Germany that are available at an early stage are very valuable to economic and monetary policymakers, particularly in the coronavirus pandemic and the thus rapidly changing environment, as they allow the economic consequences of the pandemic and the impact of the measures taken to contain it to be assessed and evaluated in a timely and reliable manner”, the authors write. With this in mind, more than 30,000 firms domiciled in Germany have so far been polled in four survey waves between June 2020 and February 2021, with just under 10,000 of these firms participating more than once. In explaining the unique features of the survey, Bundesbank experts note that the study differs from other corporate surveys conducted in Germany in that the survey content and survey intervals can be tailored directly to the Bundesbank’s own needs and that it is possible to link the data from this study with other administrative datasets of the Bundesbank. Furthermore, as the survey is conducted online, the results can be used as soon as possible for analyses and research. In future, the Bundesbank intends to carry out the survey as well as the polling of households on a monthly basis and to publish the results regularly.

Increased credit demand due to pandemic

Firms were also asked whether they are currently conducting loan negotiations or whether they are planning to take out new loans due to the pandemic. According to the survey, the share of enterprises conducting loan negotiations with banks irrespective of the coronavirus crisis remained roughly constant at around 10% between March and December 2020. By contrast, just over 20% of firms had initiated loan negotiations in the spring of 2020 due to the pandemic. Although, as the Monthly Report states, demand for credit decreased again over the summer months, a large proportion of the credit demand was still attributable to the pandemic. Moreover, COVID-19-related loan applications were rejected more frequently. In the third quarter, 41% of the loan negotiations conducted due to the coronavirus pandemic were concluded without a deal, whereas this outcome accounted for only 13% of the negotiations conducted irrespective of the pandemic.

When asked about their liquidity reserves, one-quarter of the firms stated that they generally have sufficient liquidity. In February 2021, 36% of enterprises were facing a liquidity bottleneck in the next two months, while 38% predicted a bottleneck in the next three to twelve months. In particular firms facing liquidity bottlenecks had worse outcomes in their loan negotiations according to the Bundesbank experts.

Applications for support measures chiefly from hotel and restaurant sector

In order to limit the effects of the pandemic on the economy, a variety of public support measures were developed throughout 2020. As the survey reveals, short-time work in particular was used frequently. Just under half of the firms surveyed use this instrument. Around 40% of enterprises made use of emergency aid packages, while tax deferral options (24%), the KfW special programme (12%), grants under bridging aid (12%) and the November-December aid (10%) saw lower uptake. Firms in the hotel and restaurant sector applied for support particularly often, with around 80% of them using bridging aid, November-December aid and short-time working benefits. Most of these enterprises stated that they would have difficulties if the programme in question were to be discontinued.