Back in October 2021, the decline in business profits that had been going on for so long seemed to have ended. But only two months later, the growth trend slowed again: In the face of the fourth Covid wave, ongoing supply shortages, and political demands for further lockdowns, corporate profits decreased significantly and by December 2021 reached an even lower point than in the first year of the pandemic (-3.42 percent compared to the previous year).
The collected data proves that the current situation is an existential threat for many businesses. The expected default probability – i.e. the risk of a business failure – increased for the third time in a row. “The situation is particularly dangerous for those businesses that were already hit hard in 2020, such as those of the food catering, tourism, or entertainment sectors.” This ‘gentle’ lockdown with its measures such as 2G+ is the reason they suffer even more than last year,” reports Professor Jannis Bischof, who holds the Chair of Business Administration and Accounting of the University of Mannheim and is project manager of the GBP. In these sectors, the default probability rose to 22.5 percent (plus 2.0 points). However, this development is not consistent, as in other sectors things look much better. The construction and processing industries, for example, are hardly affected by such threats.
Company leaders plan to compensate for the decline in part by raising prices. Almost two in three of them (64.9 percent) want to charge customers and suppliers more in the new year. “Especially retail and production industry intend to raise prices to make up for higher procurement costs. Prices of energy sources like oil, but also wood, have massively increased in the last few months. Companies now pass on this inflation,” reports Dr. Davud Rostam-Afschar, the academic manager of the GBP.
Satisfaction with the 3G rule at the workplace
Another topic of the current survey was the new 3G rule at the workplace and the financial burdens that come with it. Opinions vary widely: While more than 40 percent of the surveyed companies consider the new regulation to be positive, a considerable portion (15 percent) reject it completely. Mainly, the latter portion is made up of small companies that are financially burdened by the necessary inspections that come with it.
The above-average portion of companies of the construction and retail sectors that consider the 3G rule as very negative is quite striking. Hotels, restaurants and event companies, on the other hand, show above-average satisfaction with it. They consider the rule to be the only acceptable measure to avoid another lockdown.
The complete report on company trends in January 2022 (“GBP-Monitor: Unternehmenstrends im Januar 2022”) can be found here: https://www.accounting-for-transparency.de/wp-content/uploads/2022/01/gbp_monitor_2022_01_web.pdf