Trade tax is the city’s main source of income, and it expects income of 2.8 billion euros for 2022 – so far. That would be half a billion less than in the record year 2021 with its 3.3 billion. But the forecast value for the current year could go down drastically. In view of the poor economic forecasts, Munich’s economics officer Clemens Baumgärtner (CSU) compares the possible slump with the Corona-stricken year 2020: Another minus of one billion in trade tax is “an absolutely realistic figure,” he said on Tuesday at the presentation of the annual economic report City. The expected slump in economic output for the second half of 2022 in Germany, a forecast drop of 12.7 percent, all of this “can only be worrying,” said the speaker.
His conclusion on this review and outlook was then also mixed. On the one hand, the Munich economy is “robust”, alarmism is not indicated. The figures from last year 2021 are very good, but those for 2022 tend to make you frown. The spring forecast of the Chamber of Industry and Commerce shows a clearly deteriorated mood in the economy in the region. The business situation is currently still largely stable and the order situation is mostly good.
However, problems were caused by scarcity and delivery bottlenecks in raw materials, high and still rising energy prices and high inflation. In the skilled trades, the shortage of skilled workers, which has been a concern for many years, is proving to be a major problem. According to Baumgärtner, this also affects many of the sustainability issues – without craftsmen, there would be no photovoltaic systems or wind turbines.
The fact that Munich’s economy is so diversified and so well mixed has so far “prevented major upheavals” despite all the uncertainties caused by Corona and the effects of the Russian war of aggression in Ukraine. However, Baumgärtner expects that the rising energy prices will result in corporate insolvencies and thus more unemployment in the autumn.
2021 was a record year for the Munich start-ups: they received 4.2 billion euros in investment funds. The average investment volume was 24.3 million euros per financing – an increase of 3.5 times compared to 2020. The money flowed mainly into high-tech areas such as business software or robotics. With the software company Celonis, Munich now has its first so-called Decacorn, a start-up with a market valuation of more than ten billion dollars – it is also the only start-up in this top category in Germany.
Happy about the booming information and communication sector: business consultant Clemens Baumgärtner.
(Photo: Catherine Hess/Catherina Hess)
The following figure shows how important the information and communication sector has become in Munich: 93,400 people now work in this area – almost eleven percent of all employees in Munich. Baumgärtner speaks of a “real success story” and of the “second major pillar alongside the automotive industry”.
As is well known, the pandemic also had an impact on the office real estate market in 2020. But a clear recovery was already evident in 2021. Office space take-up in Munich rose by 17 percent to 664,500 square meters. This is still around 15 percent below the ten-year average. The vacancy rate increased, but in Munich the rate is only 3.7 percent, according to Baumgärtner, which is “almost full occupancy”. The trend towards working from home also seems to be reversing again – many companies are again demanding a certain number of attendance days.
The hospitality industry was one of the hardest hit by the corona pandemic. There were massive employment slumps, which in 2021 were again minus twelve percent. According to Baumgärtner, thanks to the IAA auto show, “the significant minus was at least somewhat dampened”. While employment growth stagnated in 2020, employment subject to social security contributions increased again in 2021, by 1.2 percent or 10,500 employees. The greatest increases were in information and communication technology, in business-related services and in health and social services. At the same time, however, the number of long-term unemployed rose massively in 2021: by 46.7 percent or 9,005 people.