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Economists assume that the estimated 10 billion euros for industries affected by the shutdown will not be enough. Finance Minister Scholz, for his part, emphasized that there was enough money to help all those affected.
Leading economists view the government’s emergency aid for restaurateurs and other sectors affected by the shutdown as insufficient in the long term. “Reimbursing lost sales is certainly productive,” said the director of the German Institute of Economics (IW), employer-oriented Michael Hüther, of the “Rheinische Post”. “However, the longer the lockdown lasts, the longer it will be if 75 percent is enough.”
Consumer behavior change
Profit margins in consumer-related industries are ultimately low. “In this sense, it can lead to massive corporate deaths despite aid,” said the IW director. Furthermore, retailers have no prospect of help, although their stores would suffer if cafes and restaurants in city centers were to close.
The president of the German Institute for Economic Research (DIW), Marcel Fratzscher, made a similar statement. “Aid will not be able to solve the long-term problem of the hotel, retail and travel industries in this pandemic,” he said. People would change their consumer behavior to protect themselves from the coronavirus. “This is one of the reasons we are likely to see numerous bankruptcies between companies in the coming months, not just in the sectors that are now directly affected,” said the DIW president.
Scholz disagrees
Federal Finance Minister Olaf Scholz contradicted the statements. Assume that the funds will be sufficient, said the SPD politician in ROE: “And if it reaches eleven billion, we would still manage it.” The Bundestag has approved enough money for the aid. The federal government is giving as much money as is allowed and possible under European rules.
On Thursday, Scholz, together with Economy Minister Peter Altmaier, pledged 10 billion euros worth of aid to affected industries in November. This is intended to make up for failures due to restrictions decided by the federal government and state leaders.
No more debt
One reason for Scholz’s assessment is that financial injections are not additional money that needs to be re-approved. The budgetary spokesman of the parliamentary group of the Union in the Bundestag, Eckhardt Rehberg, explained in the ARD Morning Magazine: “This bridge aid of ten billion, and I think it is important when the state says to conclude that then we will create compensation, it is not additional money. We had 25 billion in the second supplemental budget for bridge programs for companies. And of that’s still about twenty billion left. It’s not additional money for this year, “Rehberg emphasized.
The SPD and economists want to ask those who earn more to pay
However, there are more and more voices calling for high-income people to share more of the costs of the crown crisis. “The people who came out of the crisis well should help the state to recover after the crisis,” said the spokesman for financial policy of the SPD parliamentary group in the Bundestag, Lothar Binding, of “Bild”. “That should be a matter of course.”
DIW boss Fratzscher sees it similarly too. “The sharp increase in the national debt will have to be corrected after the pandemic,” the economist told the newspaper. The best way is through higher economic growth. However, to do this, politicians must drive structural change towards climate protection, digitization and globalization with much more force than before. “If this is not successful, then it will be necessary to increase taxes in the long run,” Fratzscher said.
