Ifo Institute chief: “Virus must be contained before the economy can recover”

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SPIEGEL: Mr. Fuest, in the past few months the state has intervened in everyday life and the economy in an unprecedented manner: with behavioral requirements, economic stimulus programs, subsidies. Was it all necessary?

Fuest: The government has largely acted correctly, both in the fight against the corona virus and in economic policy. In a crisis like this, markets are not working properly, so the government should intervene. It is just as important, however, that politicians exit the emergency measures after the acute crisis. We have to be careful not to get a state-run economy.

SPIEGEL: Do you see this danger?

Fuest: Yes, I’m currently being talked too much about public spending and too little about the necessary freedom for the private sector. However, our prosperity is not generated by the state, but by entrepreneurs and employees. It will not go as smoothly this time as after the financial crisis, when the economy quickly regained its footing.

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