The federal government paid parents a “child bonus” of 450 euros per child in the last two years of the pandemic to encourage low consumption. An analysis by the Bundesbank now shows that the desired effect did not materialize.

According to an analysis by the Bundesbank, the state “child bonus” paid in the Corona years 2020 and 2021 did little to boost consumption, which had waned during the pandemic.

Overall, “only a very limited consumption impulse from the child bonus can be determined,” is the conclusion of the elaboration published on Monday by the Bundesbank’s economics department. “The child bonus should therefore be seen less as a fiscal stimulus and more as a redistribution instrument from the general public to families.”

Families only spent a fraction of the “child bonus” on consumer goods

The federal government had given parents a total of 450 euros per child in three installments in 2020 and 2021. The government’s goal, in its own words, was “to provide a strong, focused economic stimulus that families would use directly.”

In their analysis, the economists at the Bundesbank compared the average monthly consumer spending of households with children and households without children in the period from July 2020 to June 2021. In order to more precisely determine the effect of the “child bonus” on household spending, the economists also carried out a series of estimates.

The result: Of the 450 euros “child bonus”, households spent just 5.4 cents per euro on short-lived consumer goods and consumer goods, i.e. a total of 24.30 euros. Even taking into account spending on consumer durables and services, which are not included in the data, it was calculated to be just €63.90.