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1 April 2020

Com­bat­ing the coro­n­avirus: Ger­many adopts the largest as­sis­tance pack­age in its his­to­ry

The global spread of the coronavirus presents Germany with unprecedented challenges. The German government is putting into place an assistance package of historic proportions. The measures contained in this protective shield aim to protect people’s health, to safeguard jobs, to support companies, and to maintain social cohesion.

Graphics on Corona
Source:  Bundesministerium der Finanzen

The German government is taking decisive, vigorous and targeted action to protect the country. The government is deploying the largest assistance package in the history of the Federal Republic. In this way, it is building a protective shield for employees, self-employed people and businesses.

To finance this package, the Federation will take out new loans totalling roughly €156 billion. The federal cabinet has approved a supplementary budget for this purpose.

Multiple measures to safeguard the provision of health care in times of crisis

  • The German government is allocating €3.5 billion for health-related measures including protective equipment as well as the development of a vaccine and additional treatments.
  • An additional €55 billion is being made available to fight the pandemic. This is crucial for enabling flexible responses at short notice as the pandemic develops.
  • The Federation is establishing a protective shield for hospitals to mitigate revenue shortfalls and higher costs.
  • Measures will also be taken to mitigate revenue shortfalls experienced by doctors who have their own practices.
  • Customs authorities are monitoring compliance with the EU’s export ban on protective masks, protective spectacles and protective suits.

The German government is also lending a helping hand to families in order to secure their income:

  • If families lose earnings due to the closure of schools or childcare centres, these losses will be covered for the most part. The same applies to freelancers and self-employed people.
  • Families that experience reduced income as a result of working short-time will be given easier access to the child supplement for low-income families.

Fast, very extensive support for small businesses, self-employed individuals and freelancers

  • The Federation is setting up a €50 billion immediate assistance programme (Soforthilfe) to support small businesses, freelancers, and the self-employed. These funds will be used to provide one-time grants to cover operating costs for three months. The grants do not have to be paid back and are designed to involve as little red tape as possible. This federal programme supplements other programmes that have already been adopted by the Länder. For this reason, Länder authorities will be responsible for handling all applications in order to ensure uniform procedures. The Länder will soon announce which specific authorities are responsible for processing applications in each respective Land. The immediate assistance programme provides for the following grants:
    • Self-employed persons and businesses with up to five employees will receive up to €9,000
    • Self-employed persons and businesses with up to 10 employees will receive up to €15,000
  • Self-employed persons will be given easier access to basic income support (Grundsicherung) to ensure that they can support themselves and pay for housing. Means-testing procedures will be suspended for six months, and payments are to be disbursed very quickly.

Comprehensive measures to support the real economy: protecting businesses, employees and jobs

  • The German government is establishing an Economic Stabilisation Fund that is targeted in particular towards large companies and that will be equipped to provide large-scale assistance. The fund supplements the liquidity assistance programmes that have already been adopted as part of KfW’s special programmes. The fund encompasses:
  • €100 billion for equity measures
  • €400 billion for guarantees
  • Up to €100 billion to refinance existing KfW special programmes
  • A multibillion-euro assistance programme will be set up at KfW, a government-owned promotional bank, for the purpose of providing businesses, self-employed people and freelancers with liquidity. To this end, KfW is making an unlimited volume of credit available through various loan programmes. This will ease the situation particularly for small and medium-sized firms that are experiencing financial difficulties through no fault of their own. Affected companies can access KfW loans via their primary bank. If necessary, they can also access guarantee instruments via their primary bank.

A detailed overview of the various programmes is available (in German) here.

  • Tax-related assistance is available to companies of all sizes in order to strengthen their liquidity. The following arrangements apply until the end of 2020 for businesses directly affected by the coronavirus epidemic:
    • Tax authorities will grant tax payment deferrals
    • Tax prepayments can be adjusted
    • Enforcement measures will be suspended

For more information click here.

  • Businesses can now apply for access to the short-time work (Kurzarbeit) scheme if at least 10% of their employees are affected by work shortages. Under the scheme, the Federal Employment Agency can pay wage costs and social security contributions on behalf of affected companies. These rules also apply to temporary/agency workers.

Detailed information on compensation for short-time work is provided (in German) by the Federal Employment Agency.

Joint crisis management

The effects of the coronavirus epidemic are being felt in Germany, in Europe, and around the world. For this reason, it is also crucial to ensure coordination at the European and international level. The Eurogroup has already agreed on an initial package of measures. Federal Finance Minister Scholz remains in regular contact with Germany’s European partners.

In addition, ongoing talks are being conducted at the level of the G7 and G20. The G7 finance ministers and central bank governors have declared that they will do “whatever is necessary to restore confidence and economic growth and to protect jobs, businesses and the resilience of the financial system.”

Statement of G7 Finance Ministers and Central Bank Governors

The German government is dovetailing its measures with steps being taken by other European governments and welcomes the European Commission’s plan to establish a €25 billion Coronavirus Response Investment Initiative.