German finance minister Olaf Scholz has announced that the government will deploy billions worth in financial aid to support the economy, safeguard jobs, and help businesses withstand the corona crisis.
“It is a situation that none of us has ever experienced,” Scholz told journalists in Berlin on Friday, noting that the coronavirus crisis will have “very tangible consequences” on the German economy.
Scholz said that the government had agreed on a package of measures to help small, medium, and large companies. The aid includes tax relief for companies, including in the form of deferral of taxes, and “unlimited” credit to businesses to ensure their liquidity for the next few years. The government will initially make €20bn (£18bn, $22bn) available to the KfW state development bank, and "there is no upper limit on the loan amount that KfW can grant," economy minister Peter Altmaier said.
“This is the bazooka, with which will do the necessary,” Scholz said. “We are not feeling our way around, we are putting all our weapons on the table.”
The German parliament also unanimously agreed on Friday to green-light a new law that enables the government to make access to short-time work easier and reduce costs for companies.
German chancellor Angela Merkel had on Thursday described the coronavirus pandemic as an “exceptional situation in every respect,” and “more extraordinary than the banking crisis,” of 2008, as lives needed to be saved as well as the economy kept running.
Germany’s leading economists this week had urged the government to act fast to protect the economy from financial damage during the pandemic. They called for tax cuts, part-time working hours, and state participation in companies — and said it was time for the government to waive its debt-break rule, which forbids it from taking on any new debt.
Corona cases climb
Robert Koch Institute director Lothar Wieler reported today that corona cases in Germany had risen to over 2,300 — a significant increase from 1,565 on Wednesday. So far, six people have died.
Merkel warned on Wednesday that up to 70% of the population of Germany is likely to contract the virus. European leaders broadly expect that figure of between 60% to 70% infected to be the case across all EU countries.
Merkel urged people to forego things they would normally do — like going to concerts — for the greater good of not transmitting the infection to vulnerable elderly people or those with chronic illnesses.
The chancellor said that since there is no vaccination or therapy against the virus, the focus must be “gaining time” to slow it down and ease the pressure on the hospital system. The Robert Koch Institute director said this week that the world cannot expect a vaccination against coronavirus before the end of the year, or even 2021.
Most German states have now banned any gatherings with more than 1,000 attendees, including theatre, opera and other cultural events. The states of Bavaria, Berlin, Hamburg, Lower Saxony, and Saarland will close down schools and kindergartens from Monday.