Impact of epidemic on CCI - GERMANY (Naumburg & Amberg)

/prepared on 22 May 2020/

Economic forecast

More than 6.600 CCI actors took part in a poll, initiated by Kreative Deutschland from the 9^th until the 31^st of March. It is forecasted that the corona lock-down will influence the German CCI in three waves:

- 1^st wave: Tens of thousands of CCI actors lost their incomes from one day to the next. Events, festivals and fairs were cancelled, current projects could not be continued. A lot of CCI members already lost half of their yearly income within several weeks.

- 2^nd wave: The situation of CCI will not normalise after the relaxation of restrictions. On the contrary, companies are expected to reduce their marketing budget in order to consolidate their core businesses. In the event sector a lot of festivals, concerts, conferences etc. are cancelled until the end of August 2020 by law and even until the end of the year by voluntary decision of the organizers. Moreover, it is uncertain if people will be willing to take part in events during the next months.

- 3^rd wave: In 2021 and probably 2022 copyright royalties will be missing. 

All told, nearly half of the participants to the poll are expecting 30% loss of sales in 2020, while every fifth person estimated the loss to be closer to 50%.  

The exact effects of the Corona Crisis on the public budget have yet to be measured. However, the restrictions on social contact and the consequences on businesses translate into lower revenues to local and national budgets and on increased expenditures, especially in the social and economic area (increased unemployment, short-time work, etc). This means increased pressure on public spending, including that on culture-relevant budgets. An exact estimate of these effects can however not be made, at the moment.

 CCI relevant support measures

The German Federal Government puts several initiatives in place to support individuals and companies affected by the COVID-19 restrictions on public life. Relevant for German-based CCI companies are some of the larger national economic incentives programs as well as the CCI-dedicated ones.

- Grants and Subsidies: emergency aid for self-employed and small businesses in economic distress in the total amount of up to €50 billion (open to creatives who work as freelancers). Funds can be used for ongoing operating costs such as rents, loans for business premises, leasing fees and the like.

- Guarantee Programs to address liquidity difficulties of companies, the KfW, Promotional Bank of the Federal Republic of Germany offers provide working capital loans and guarantees.

- Short-time work allowance to cover employees wages for employee retention in the event of a slump in business: 60% of the net wages lost. Employers also receive reimbursements of the social security contributions for the number of hours lost.

- Increased protection mechanisms regarding the termination of rented rooms such as studios and clubs.

- Regulations concerning lost fees for freelance creatives for commitments that were canceled due to the Corona crisis (for cultural institutions and projects funded by the federal government): covers between 40% to 60% of the net remuneration, up to a maximum of €2,500.

- Compensation for loss of earnings through quarantine: Anyone who is officially quarantined due to the coronavirus is subject to a ban on work and thus suffers a loss of earnings can receive compensation (more infos here).

 Several other initiatives address support for cost of living (including for basic income, childcare subsidies, compensation for lost wages due to school and daycare closure, adjustments of parental allowance and so on) and tax aids (including deferral of sales tax, income tax and corporate income tax, advance payments on commercial, income and corporate taxes, deferral of social security contributions, adjustment of contributions to the artists' social security fund).