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With the abandonment of balanced long-term budgetary targets and the release of the constitutional debt brake, it could be a broader public stimulus program than the Marshall Plan after World War II. Not surprisingly, there are corresponding disagreements about the size and use of the program.
Some want aid to focus on some key industries, while others are in favor of the broadest possible approach. The criteria range from bankruptcy prevention and job preservation to creating a new economy, innovation and green practices.
Here are some opinions that reflect the intense debate. Among them we will find speeches by economists, business leaders, environmentalists and politicians.
Package size
Germany is already investing heavily in managing the economic downturn of the pandemic. Measures ranging from employee compensation to company loans and guarantees have already increased debt by around € 156 billion, or around 4.5%. GDP from last year.
Experts predict that at least the same amount of money will be needed for the recovery phase. His argument: Germany can borrow at negative interest rates for up to 30 years, and a cost-driven economy will easily get out of debt.
“It will take a real fiscal stimulus of more than 5% in the next two to three years to really start the recovery of the German economy. GDP So far, there is absolutely no reason to worry about reducing the debt-to-GDP ratio in the coming years. three, five or even 10 years, “said Marcel Fratzscher, president of the Berlin-based Institute for Economic Research, DIW.
However, skeptics believe that after the worst crisis, Germany should refocus on budget stability. This means restoring the debt brake, returning to surpluses and investing in some of the companies most affected by the crisis: the government has just offered Lufthansa € 9 billion in support in exchange for 20%. his actions
“The debt brake was released during the crisis, but that does not mean that there is no need for adequate budgetary surveillance.” Conditions designed to expand the role of the state in a particular sector are not effective. Due to excessive conditions, the economy is facing restructuring by the state, “said Katja Hessel, chair of the Bundestag finance committee.
The German media has already realized the idea of a new € 150 billion package that would include family benefits and simplified rules for investment subsidies.
“It just came to our attention then. We should do the opposite, think about what sounds rational and how we can finance it. The amount may turn out to be significantly less than what is currently being considered. It is irresponsible to think first about the amount, and only then propose a plan, ”said German Finance Minister Olaf Scholz.
Where to spend money
As almost all sectors of the economy have been affected by the crisis, the list of lobbyists is also not short.
German automakers are demanding the revival of a convenient scheme for them that spurred sales after the Great Recession, but the government is working on a broader package.
“The cash-for-cash program we ran last time is pointless this time.” The automobile industry must improve. We will support you, but only if you respect environmental requirements, ”said Sebastian Brehm, a member of the Bundestag and CSU’s financial representative.
Service providers experience the most severe consequences of the coronavirus quarantine, which are large companies that generally find it almost impossible to survive sudden crises. Politicians have already pointed out that more aid will be provided soon.
“In the coming months, we must support sectors that have been particularly affected by the coronavirus crisis, including arts and culture, the food industry, hotels and local shops,” said Katharina Droege, a member of the Bundestag.
How to spend money
Economists, lobbyists and politicians are in favor of specific measures to guarantee the most efficient use of funds.
Consumption promotion is likely to be addressed. Household spending has fallen since the quarantine measures came into effect and has not yet recovered as people begin to increase their savings amid prolonged uncertainty.
Success in tackling this problem would be an additional advantage if the economy abandons its former dependence on exports in the face of increasing protectionism.
“Securing and strengthening income and, at the same time, increasing purchasing power should be the main objective of the stimulus package,” said Stefan Koerzell, member of the executive board of the German Federation of Trade Unions DGB.
Investment in infrastructure is needed to help the economy grow faster in the future. Last year, municipalities reported a lack of spending of 138 billion euros, including basic services such as schools and streets.
“Public investment should be distributed in a way that strengthens competition. The focus could be on health, digitization, the climate and education. Ideally, the state would create incentives for large-scale private investment in these areas,” said Veronika Grimm, member of the government’s Economic Advisory Council.
Industry associations have identified a long list of adjustments that would increase company costs.
“The most pressing issue is tax benefits for companies. Strongly developed compensation would be the most effective means of mitigating the negative impact of the pandemic on corporate budgets,” and “lawmakers should significantly improve investment amortization rules.” said Dieter Kempf, head of the BDI industry lobby..
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