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The Germans fear for their prosperity

The mood in Germany is extremely bad.

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The Germans fear for their prosperity

The mood in Germany is extremely bad. This is shown by a current study by the consulting company EY on consumer confidence, which is exclusively available to WELT. On the one hand, Germans rate their current financial situation more negatively than ever before, and on the other hand, fears about the future are spreading.

Almost every fourth of the more than 1000 respondents says that their current economic situation is not good. Such a high value did not even exist during the financial crisis of 2008/2009. "Inflation and the associated rising cost of living are currently putting an enormous strain on people," explains Henrik Ahlers, CEO of EY Germany.

Conversely, 25 percent of Germans are still satisfied with their finances. In the past twelve years, however, this number has always fluctuated between 34 and 51 percent.

And there doesn't seem to be any improvement in sight. At least 56 percent of Germans are pessimistic about the future. In the previous year, this value was only 34 percent. And before the start of the corona pandemic, figures around the 20 percent mark were common over a longer period of time.

The pessimistic attitude runs through all age groups, as the study shows. However, it is particularly pronounced among the 56 to 65 year olds, i.e. in the generation that will be the next to retire. It also fits with the fact that concerns about a lack of financial security in old age have fundamentally increased.

But even in the here and now, Germans are pessimistic about their own finances. Already 41 percent of those surveyed believe that their economic situation will deteriorate in 2023. That is almost twice as many as in the last survey a year ago and compared to 2020 the number has almost quadrupled.

And here, too, the respondents between the ages of 56 and 65 stand out. In this age group, as many as 52 percent fear that things will get even worse for them in the new year. "The multitude of crises, which also seem to reinforce each other, robs people of their optimism," says Ahlers.

That is understandable, but at the same time it also clouds the view. “It is also important to note that the current situation is not as bad overall as it feels for many.” The economy is doing surprisingly well at the moment. Despite the increased uncertainties, the order situation is considerable. A significant increase in unemployment is therefore not to be feared.

However, the Germans seem to have already priced this aspect into their expectations. In any case, only very few are concerned about their jobs. After all, 85 percent of Germans consider their job secure. And across all age groups.

However, there are differences when looking at income categories. Unsurprisingly, the perceived job security is highest among top earners with a net household income of more than 70,000 euros, but also among high earners with incomes between 50,000 and 70,000 euros. On the other hand, those on low wages with less than 25,000 euros net income are more concerned. However, 76 percent still consider their job there to be safe.

At the same time, those affected see themselves as long-term losers. At least two-thirds of those in this income bracket feel their standard of living has deteriorated over the past decade. In total, 38 percent of all respondents are of the opinion that they are in a worse position today than they were a decade ago.

Conversely, 35 percent report an improvement. The bottom line is that, for the first time since 2009, more people have the feeling that their standard of living has plummeted. It is also striking that the proportion of respondents who rate the development of their standard of living positively decreases with increasing age.

For those over 65, the figure is only 21 percent, while for those under 35 it is almost half. However, this age group also includes the step from training to everyday working life.

Irrespective of age and income, people are now tightening their belts everywhere. “The Germans are saving,” describes EY boss Ahlers. Larger purchases in particular are avoided, especially buying cars, kitchens and sofas. Almost two-thirds of Germans are planning much smaller budgets here.

But spending on consumer electronics such as computers, televisions and smartphones is also being reduced, specifically in more than every second household. The same applies to renovation and modernization work on the house and apartment.

And everyday joys are also increasingly disappearing. For example, 49 percent of those surveyed plan fewer visits to restaurants and 42 percent save on leisure activities such as cinema, swimming pool, sports or buying new clothes. Higher budgets are planned for groceries alone. However, this is probably due to the sharp rise in prices.

Behind this will and/or compulsion to save is the concern of high and further rising energy prices and living costs, as the study shows. And the topic of war is also high on the list of concerns, along with the refugee crisis in Europe as a result.

At the same time, people are becoming more aware of the economic slowdown in Germany. Especially since the fears are great: after all, two-thirds of Germans assume that the economic situation in Germany will deteriorate. The mood is even worse than in the crisis year 2008, the EY researchers report.

Not even every tenth person surveyed expects an economic upturn in Germany. In the course of this, issues such as climate protection and the threatening environmental pollution are pushed into the background. In any case, in the corresponding list of concerns they show a decline in the number of entries compared to the previous year.

Ahlers thinks that's dangerous. "Due to the current problems, which seem more concrete, we must not lose sight of the fact that we are in an unprecedented transformation process - economically and socially." Companies will lose touch if they put off urgently needed sustainability investments, warns the EY boss.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 5 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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