Rising infections in Germany put brakes on consumer spending, study reveals

Fri, Aug 28, 2020
By editor
2 MIN READ

Foreign

GERMANY’S upward trend in coronavirus infections has dealt a blow to hopes for a swift recovery in consumer spending, the GfK economic research institute said on Friday.

“An increase in the number of infections and the fear that coronavirus-related restrictions will be further tightened are creating uncertainty and consequently dampening the mood,” GfK consumer expert Rolf Buerkl said on the release of the group’s consumer climate index for August.

The indicator has seen three consecutive months of improvement, although the numbers remain in negative territory.

The Nuremberg-based researchers are now predicting a figure of minus 1.8 for September, down from a revised result of minus 0.2 for August, according to the monthly survey, which is based on around 2,000 consumer interviews.

The drop in consumer confidence came despite a reduction in value-added tax (VAT) in Germany.

The measure, designed to boost spending during the coronavirus crisis, was part of a supplementary budget passed in July that brings the country’s total debt this year to around 218 billion euros (259 billion dollars).

VAT was reduced from 19 to 16 per cent, or 7 to 5 per cent for the reduced rate on essential items.

Recently, the number of coronavirus infections confirmed daily in the country has reached four digits.

Last weekend, it surpassed 2,000 for the first time since late April.

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– Aug. 28, 2020 @ 12:20 GMT |

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