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ECONOMY

Majority of Germans ‘very afraid’ of post-Covid tax hikes

The high national debt in the coronavirus pandemic - and its impact on people's bank balances - has become the number one concern for Germans in 2021.

Majority of Germans 'very afraid' of post-Covid tax hikes
With national debt rising to record levels, Germans say they are terrified of facing future tax hikes and inflation. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

That’s according to a recent study titled ‘Fears of the Germans’, which was published on Thursday and conducted on behalf of insurance firm R+V.

In it, 53 percent of 2,400 respondents named fear of higher taxes or benefit cuts because of Covid as one of their main concerns.

A fear of rising inflation took second place, with 50 percent saying they were afraid of an increase in their living costs. Just as many mentioned the cost of EU debt, which took third place in the survey.

Over the course of the Covid crisis, public debt grew by 14.4 percent – or €273.8 billion – to a record level in 2020, according to the Federal Statistical Office. As a result of the measures introduced to combat Covid, inflation also soared to 3.9 percent in August, the highest level in many years.

READ ALSO: German consumer prices rise by highest level in three decades on back of pandemic measures

This means that Germans are facing an increase in the price of everyday necessities – and lots of people are dealing with a loss of earnings due to the pandemic. 

Last year former US President Donald Trump took the top spot for the second year running as the greatest source of German angst in the insurance firm’s ranking. 

Refugees trump climate change as key concern

In the annual survey, participants are asked to rate given topics on a scale from one (no fear at all) to seven (very great fear).

Alongside economic issues, the fear that the state could be overburdened by refugees came in fourth place as 45 percent of respondents named this as a concern.

READ ALSO: Germany takes in close to 50,000 refugees in first half of 2021

Meanwhile, 43 percent are worried about harmful substances in food, and the same number are worried about care in old age. Seventh place is taken by concerns about “tensions caused by the influx of foreigners,” which was mentioned by 42 percent of respondents.

The election campaign’s top issue – climate change – only came in eighth place in the annual survey, with 41 percent of respondents saying they were very afraid of more frequent natural disasters and extreme weather events. However, according to R+V, the survey took place before the flood disaster in western Germany.


Climate activists from Greenpeace protest outside Germany’s annual IAA motor show in Munich. Photo: picture alliance/dpa | Sven Hoppe

In order to get a more updated picture of this, another 1,000 people were surveyed online at the end of July – and interviewers noted a drastic change. 

READ ALSO: Climate change made German floods ‘more likely and more intense’

In the supplementary survey, 69 percent expressed fear of natural disasters and extreme weather, while 61 percent were concerned that climate change would have dramatic consequences for mankind. These are record figures in its 30 years of surveys, R+V explained.

According to the insurance firm, around 2,400 representatively selected people aged 14 and over were surveyed from May 25th to July 4th on their views – with the exception of the additional survey in late July to determine views on climate change after the flood.

Vocabulary 

Tax increases/hikes – (die) Steuererhöhungen

Living costs – (die) Lebenshaltungskosten

National/public debt – die (Staatsverschuldung)

The top issue of the election campaign – Das Wahlkampf-Topthema

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

READ ALSO:

With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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