The Coronavirus Crisis: Keeping the economy running, meeting basic necessities, maintaining innovation
This acatech Impulse presents the Academy’s initial reflections on the coronavirus crisis. We will explore the issues in greater depth over the coming months.
The coronavirus crisis is putting our healthcare system under unprecedented pressure. Hospital capacity in particular will be pushed to its limits if the number of infections is allowed to grow unchecked. Our hospitals will not be able to cope with an explosion in the number of severely ill patients requiring intensive medical care. Moreover, we do not yet have a testing infrastructure that can reliably identify the majority of people infected with the virus from an early stage.
As a result, the government’s current strategy is primarily centred on social distancing in order to slow down the number of new infections and check the spread of the virus.
In order to protect the public, these measures must have the utmost priority. However, they also have economic implications. Economic activity has been brought to a standstill on an unprecedented scale. And this has happened simultaneously, not just in Germany, but in virtually every economy around the world. A global economic crisis is inevitable, although it is still too early to make meaningful predictions about its duration and scale. At the moment, however, precise economic forecasts are not a priority – what we need to do is recognise the overriding importance of preventing the economy from coming to an abrupt and long-lasting standstill. This is particularly essential so that the healthcare system can perform as effectively as possible – after all, it too is part of the economy and thus vulnerable to economic impacts. It is also necessary to ensure that people’s basic necessities are met in all the other areas of their lives.
The government has recognised this in principle and is supporting its strategy for containing the epidemic with a range of supplementary economic policy measures. These include regulations on short-time work, liquidity assistance and tax deferrals designed to compensate for loss of income in households and prevent companies with sound business models from going bankrupt purely due to liquidity issues. These support measures are absolutely critical and must be delivered rapidly and in a targeted manner. The Federal Government must also provide strong organisational support for the economy during the crisis and establish its own expert task force to monitor developments.
This publication provides suggestions for how to address the challenge of implementing the necessary measures in practice.
It is divided into three parts:
- We begin by focusing on the immediate crisis interventions needed to support the healthcare system, get through the short-term economic shock and mobilise entrepreneurial potential.
- We address the implications of a potentially longer-term economic shutdown by examining some of the industries that provide the basic necessities required to maintain social stability.
- We argue that we should already start preparing economic stimuli for the “post-coronavirus era” in order to get the economy out of crisis mode and back on a (sustainable) growth path as soon as possible. At this time, it is more important than ever to forge ahead with strategic innovation policy projects.
New technologies and innovations play an important role in all three areas.