In a European comparison, Germany reacted to a similarly high corona shock with significantly more government aid.
(Photo: dpa)
Berlin The Ukraine war puts an enormous strain on German companies. Economic aid is in the works, which goes hand in hand with the question: What can Germany actually afford? The debt brake is to apply again from next year. At least until the summer, the federal government also wants to pay out aid to companies that have had difficulties as a result of the corona crisis.
That’s a problem, says Friedrich Heinemann from the Leibniz Center for European Economic Research (ZEW). “In contrast to other European countries, Germany completely missed the right time to end the corona aid,” says Heinemann.
Evidence of this is a new ZEW study for the scientific service of the European Parliament, which is available to the Handelsblatt. It shows: In a European comparison, Germany reacted to a similarly strong corona shock with significantly more government aid.
The study shows that for every euro that German gross domestic product fell in 2020, ten euros of state aid have been made available to date. In other countries where the corona shock was comparably large, the aid was significantly less.
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Five euros in aid were made available in Denmark for every euro less economic power. In Slovakia or Belgium it was only about two euros. “Nevertheless, Germany is hardly better off today in terms of economic recovery and in some cases even worse off,” explains Heinemann.
“Bazooka” still without end
The study also compares the design of the aid programs. In the case of loan guarantees in particular, the ZEW attests that German politicians are not doing well. Other countries like Spain did better because it involves the banks more in the risk of default and thus creates incentives to examine business models. “In Germany, on the other hand, business models that will certainly not be able to survive in the long term are being happily supported,” says Heinemann.
Eastern European countries like Estonia would also be characterized by an extremely quick exit from all crisis programs: “And that didn’t do any serious damage to the economy there overall.”
After the outbreak of the virus, the then Finance Minister Olaf Scholz (SPD) announced in March 2020 that the economic aid would have the strength of a “bazooka”. Economists initially supported the initiative. Gradually, however, criticism of the actions of the federal government grew.
In the meantime, the federal government has paid out 67 billion euros in direct aid and 56 billion euros in loans. Nine billion euros have flowed out of the Economic Stabilization Fund (WSF), plus short-time work benefits and state programs and guarantees.
The government had repeatedly extended the aid, most recently until the end of June 2022. Critics say that’s not a good plan. “We must be concerned that we are unnecessarily holding up structural change,” says the co-president of the Kiel Institute for the World Economy, Stefan Kooths. Therefore, the support measures must come to an end.
Berlin is working on comprehensive new aid
After all, the ideas for new economic aid to cushion the consequences of sanctions, high energy prices and disrupted supply chains are again comprehensive, adds Heinemann.
In Berlin, work is being done in particular on aid for the battered energy industry. There are plans to rededicate the 600 billion euro WSF from the corona crisis, with which Lufthansa, among other things, was saved.
Compensation payments or direct aid are also being considered. In addition, simplified access to short-time work benefits could be extended. Economics Minister Robert Habeck (Greens) has already officially announced a loan program from the state KfW development bank.
More: Banking Association presents pessimistic economic forecast.