Change of course for Corona aid: Federal government plans to end generosity

In November and December, the federal government pays large parts of the lost sales as a result of the partial lockdown. Members of the government have now made it clear: This cannot and will not continue in January.

The federal government is preparing a change of course for corona aid. Both Federal Economics Minister Peter Altmaier and Chancellery Chief Helge Braun made it clear that the reimbursement of 75 percent of sales losses granted in November and December in the course of the partial lockdown could not be financed in the long term. “We can certainly not continue to offer very comprehensive packages such as the sales rebate for an unlimited period of time,” said Altmaier in Deutschlandfunk. Braun told the “Handelsblatt” that the state was “not able to act indefinitely”. “In the long run, turnover cannot be the central criterion,” added the head of the Chancellery.

“We have to work out more targeted help by January,” said Braun and emphasized: “There will continue to be help for the economy.” In future, aid will be geared more towards fixed costs, as with the bridging aid that will apply from January. Altmaier referred to the extension of the bridging aid until the end of June, with which companies with large declines in sales could get a significant part of their fixed costs reimbursed.

Yesterday, Federal Finance Minister Olaf Scholz defended the “particularly generous” aid in November and December on ZDF, but at the same time made it clear that the “normal regime with bridging aid” would apply from next year.

Short-time work increases due to partial lockdown

In November and December, the federal government supports companies, associations and institutions that had to close as a result of the partial lockdown with particularly extensive assistance. 75 percent of sales from November 2019 are to be reimbursed – for companies with up to 50 employees. Larger companies should receive less. A total of around 30 billion euros is earmarked for this revenue-based aid. Applications can be submitted since last week.

As a result of the forced closings, the Ifo Institute recorded an increase in short-time working in Germany for the first time in months. The proportion of companies with short-time work rose to 28.0 percent in November. In October the share was 24.8 percent. The researchers determine the numbers based on their own surveys of 7,000 companies. The Federal Employment Agency (BA) can only provide reliable figures with a delay of several months due to the accounting procedure for short-time allowance.

According to the ifo figures, the share of short-time working in hotels (from 62.9 to 91 percent) and in the catering industry (from 53.4 to 71.7 percent) rose particularly sharply in November. At travel agencies and tour operators, 91.1 percent of the companies had registered short-time work for employees. “Especially in these sectors, which have been massively affected by the partial lockdown, a great deal of short-time work is being implemented again,” said Ifo labor market expert Sebastian Link. The increase occurred through almost all major branches of the economy. A slight decrease was only recorded in industry.

Despite aid, there are significant pandemic consequences for the economy

The extended and extended regulation on short-time working allowance is an essential component of the Federal Government’s aid for companies in the Corona crisis. Chancellery chief Braun expects, despite the billions in aid, that the pandemic will “leave a significant mark on the economy”. “The state can help so that the majority of companies get through the crisis. But it will not remain without consequences,” said the CDU politician. “As a society we have to stick to December and the months up to March by observing the AHA rules and reducing our contacts. Where that is not enough, cuts are inevitable. Then spring will come and hopefully the vaccine too.”

The question of financing state aid in the Corona crisis, which Finance Minister Scholz estimates at a total of over 300 billion euros for the current and the coming year, is increasingly coming to the fore. “We have to evaluate what Corona has cost us as part of a cash drop,” said Braun. He did not rule out tax increases, but emphasized: “I do not believe in a new solidarity surcharge at all.” Scholz had previously shown himself open to possible tax increases and referred to a possible increase in the top tax rate.

Tagesschau24 reported on this topic on November 30, 2020 at 11:00 a.m.


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