German cities hit harder in coronavirus pandemic

Munich (dpa) – Cities are suffering particularly badly from the coronavirus crisis when it comes to their finances, a leading German research institute said on Monday.

Urban areas saw unemployment rise faster and the business climate deteriorate more than elsewhere, according to the study by the Munich-based ifo Institute.

“Social consumption plays a greater role in the cities. This is where the effects of the pandemic hit particularly hard,” said Andreas Peichl, head of the ifo Centre for Macroeconomics and Surveys.

“Because less manufacturing is located in cities, they also benefited less from the recovery in the sector in the second half of 2020,” Peichl said.

According to the report, it is too early to say whether cities will also be the losers in the long term.

On the one hand, cities are likely to benefit more than average from post-crisis catch-up effects. On the other hand, trends such as working from home could make central city locations less attractive to companies, meaning “they may migrate to cheaper rural areas.”


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