The COVID-19 pandemic has caused a deep recession over the last year. According to the Federal Statistical Office, gross domestic product in Germany contracted by 4.9% last year. Hence, the coronavirus crisis has been responsible for the second worst recession since German re-unification. This is only surpassed by the global financial crisis, which caused a 5.7% collapse in GDP. Neverthe-less, the recession has proven far less severe than was expected at the outbreak of the pandemic. Initial estimates at the time ranged from a decline of 7.2% at the optimistic end of the scale to 20.6% in a pessimistic scenario. However, these figures underestimated how rapidly companies would be able to respond to the new situation. The largely seamless transition to remote working has particularly ensured that the impact on productivity has been significantly milder than initially anticipated. The various coronavirus aid programmes and massive use of short-time work have also had a stabilising effect on German economic output. Overall, the German economy was only in recession for two quarters. It has now been in the recovery phase since the third quarter of 2020. How long this phase will last is particularly dependent on further infection rates and the compre-hensive roll-out of vaccines both on a national and international level. Projections to date assume that the economy will return to its pre-crisis level during the first half of 2022. The German economy is then expected to resume its long-term growth trajectory.

Private consumer spending, which proved a key pillar of the economy during the global financial crisis, has been one of the economic indicators most affected by the coronavirus crisis. The most significant downturns have been witnessed in those sectors worst affected by measures to contain the pandemic, namely hospitality, non-food brick-and-mortar retail and the leisure and cultural sectors. In contrast, the office letting markets have survived the crisis relatively unscathed to date in terms of vacancy rates and rental levels. One reason for this is that the employment market has proven robust, with the unemployment rate rising by only 100 basis points year on year. However, there are still more than two million employees in Germany working short-time and a proportion of these could find themselves unemployed once the obligation to file for insolvency is restored. Since the retail and restaurant sectors account for the majority of applications for short-time work at present, however, the number of office employees in Germany is not expected to significantly de-crease. On the contrary, the economic sectors typically relevant to the office market, such as the public sector (+ 66,000), qualified business services (+ 37,000) and the information and communication sector (+ 23,000), have even registered an increase in the number of employees year on year (as at December 2020).