When it comes to saving the economy from the corona crisis, Olaf Scholz has never saved with superlatives. As Federal Minister of Finance, he brought out the “bazooka” with the first rescue program, the economic stimulus program was a “boom” for the economy, and the German short-time work program was internationally the “gold standard for combating crises”. The hard-hitting crisis policy meant that Germany got through the crisis well, repeated Scholz like a prayer wheel.
But now the British “Economist” is questioning the Chancellor’s brilliant crisis record. The magazine has created its own index of how well industrialized countries have come through the pandemic economically so far. The verdict for Germany is as surprising as it is devastating: Out of 23 OECD countries, Germany only ranks 20th.
According to the “Economist”, the Scandinavian countries got through the crisis best: First and foremost Denmark, but also Norway and Sweden. The USA also weathered the crisis quite well economically.
The core states of Europe, on the other hand, land at the bottom of the list. France is still in 15th place, Great Britain in 22nd place, followed by Spain. But also Europe’s largest economy, the Federal Republic, comes off pretty badly in 20th place.
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The “Economist” used five economic parameters for its index: the development of the gross domestic product (GDP), investments, household income, the national stock indices and the debt level. The values from autumn 2019, i.e. shortly before Corona broke out, were compared with the figures from autumn 2021.
Index creates discussions
Unlike the Scandinavian countries or the USA, Germany has not yet been able to make up for the crisis economically. In terms of GDP, Germany recorded a decline of 1.1 percent in the past two years. For comparison: In Norway, the economy grew by 3.5 percent in the same period despite the pandemic.
Investments in Germany have also fallen by 1.9 percent since the outbreak of the crisis, while they rose by 12.1 percent in Denmark, the leader in the index.
In contrast to the Scandinavian countries, household incomes also fell slightly in Germany. The Federal Republic also comes off badly when it comes to the development of the share prices of the largest companies. These rose by 15.6 percent, but much less than in most other countries.
The index causes quite a bit of discussion on social networks. German economists criticize the methodology. For example, Achim Truger wrote that one should “not overinterpret five indicators that fluctuate widely and could be influenced by special factors such as corona aid”. Spain, for example, is likely to be in a bad shape, mainly because of the collapse of the tourism industry, said other observers.
Economist and SPD board member Gustav Horn complained that the index does not take into account the development of unemployment. This could distort the ranking to the disadvantage of Germany.
In fact, thanks to short-time working, unemployment has increased relatively little in this country. Horn also asked whether Germany had “stricter conditions” for economic aid than other countries.
Many grants remained untouched
Other economists pointed to the increasing dependency on exports in the downturn, because of which Germany, as a strong export country, does relatively poorly in terms of growth in an international comparison. However, Germany would benefit from the export strength again as soon as the pandemic is over and the global economy picks up.
The economic aid that was not used shows that the crisis was at least not as bad as feared. This applies not only to Germany, where tens of billions of billions of aid have not been requested, but also to the other EU member states, as a new study by the Leibniz economic institute SAFE shows, which is available to the Handelsblatt. Essential corona aid from the EU remained untapped.
Immediately after the outbreak of the corona pandemic in spring 2020, the EU put together its own rescue package worth 540 billion euros. According to calculations by SAFE scientist Vincent Lindner, however, only around 125 billion euros have been called up to date.
Above all, the aid loans of the European rescue fund ESM in the amount of 240 billion euros turned out to be unpopular. So far, no EU member state has submitted an application for assistance to the ESM.
In theory, ESM aid would allow some countries to borrow more cheaply. However, the example of Italy shows that the provision by the ESM has strongly politicized the aid programs. “This is a missed opportunity,” says SAFE researcher Lindner.
Only the SURE program has been almost completely exhausted
From April 2020 to May 2021, loan guarantees of only 12.3 billion euros were approved from the European Guarantee Fund (EGF) with a volume of 200 billion euros.
The largest share was accounted for by projects in which several countries were involved, followed by Spain, France, Italy and Portugal. In contrast, only one project was approved for Germany – the largest contributor to the EGF alongside France and Italy.
“It is significant that the Czech Republic, Estonia, Hungary, Latvia and Romania did not even participate in the EGF. The fragmentation of the EU is particularly evident here, ”says Lindner.
Only the SURE program, which provides EU states plagued by high unemployment with loans totaling 100 billion euros, was almost completely exhausted by a total of 19 states with 95 billion euros.
The main beneficiaries are mainly southern European countries such as Portugal, Greece, Malta and Cyprus. Spain and Italy have also exhausted the maximum amount. Central and Eastern European countries, on the other hand, benefited to a much lesser extent.
This trend applies not only to SURE, but to all crisis programs that the EU launched during the pandemic, says Lindner. “In contrast, Northern and Central European, but also Eastern European countries either did not take advantage of the aid or received far fewer loan commitments compared to countries in Southern Europe,” says Lindner.
More: Suddenly powerful: How the EU Commission directs the countries with Corona billions.