BERLIN (Reuters) – Under pressure from his European colleagues for years, spend more money, Germany has finally found a bumper economy served package is financed with new debt, but Berlin is a splurge, the re-discovered love, it caused fresh unease among its neighbors.
German Chancellor Angela Merkel speaks during a press conference, according to the coalition of feline corona-virus and economy on stimulus-measures-to-restart-post in the Reich Chancellery in Berlin, Berlin, Germany, 3. June, up to the year 2020. John Macdougall/Pool via REUTERS
German Chancellor Angela Merkel’s government coalition, unveiled several stimulus measures worth € 130 billion ($146 billion) late on Wednesday evening to speed up the recovery of Europe’s largest national economy of the corona-virus-pandemic.
The package, which follows, is a 750-billion-euro rescue package agreed in March, with a temporary cut in VAT, as well as cash handouts for parents, and more support for small businesses, and large incentives to purchase electric cars.
The package of extra spending and tax cuts equivalent to about 4% of Germany’s expected economic output by 2020, increasing their overall discretionary national fiscal push to 14%. Together with the liquidity limit and guarantees, Berlin feline corona-virus-and-answer corresponds to more than 30% of their economic output.
The measures are not to be expected to push up Germany’s debt-to-GDP ratio of around 60% in the year 2019, at least 75% in the year 2020, a leap from the German bonds, there’s a massive incentive boost during the global financial crisis more than a decade ago.
“The package shows once again that Germany is willing and able, if it comes down to it,” Berenberg economist Holger Schmieding said.
Like Germany, the measures go significantly above other national emergency splurge measures from the euro zone colleagues, the sheer scope of the new issues concern was expressed that the discrepancy in the reaction could increase imbalances in the European Union and the distortion of the bloc’s internal market.
Germany alone accounts for almost half of the emergency-corona virus in the area of state aid approved to consider by the Executive arm of the EU, in addition, that those countries with the deepest pockets, could always an advantage.
“It has a lot of tension about state aid is dealt, the of the member States, in particular Germany,” said a European diplomat recently, in the course of the 9-billion-euro rescue package for Germany’s flagship airline Lufthansa (LHAG.DE).
In Germany, this response is reminiscent of confusion.
“The criticism is said to be a bit of a Paradox, and sometimes even disingenuous,” a senior German government official.
“In front of the corona-virus crisis, and that we were ” the austerity measures, the Germans, who always were, and we spend too little. Now we are in the ‘big spender’, the Germans, to buy who are trying to gain competitive advantage with their ” deep pockets.”
German officials also say that other European countries, Berlin’s toy to benefit, as increased domestic demand, and automatically suck in more imports from the French, Italian or Spanish producers.
In addition, Germany has to increase, it is usually a back-up plan for the European Commission, the joint debt, the zen on an unprecedented scale, or possibly up to 750 billion euros in cash and use this money to support the economies-by the corona-virus-pandemic.
As part of this, it is provided, the European Recovery program Fund, the European Commission has a deadline, a dashboard tool, the conditions of competition between the member States.
This dashboard tool was designed to support private sector investments in healthy companies in need of liquidity or as an investment, so we said a better balance of the unbalancing that has happened,” said a senior EU official.
Reporting by Michael Nienaber; Additional reporting by Gabriela Baczynska in Brussels and Leigh Thomas in Paris; editing by Toby Chopra