Germany: Bazooka packages will stimulate our road to economic revival
The novel coronavirus, or the Covid-19, is a huge challenge. More important than our immediate emergency reaction is what lessons we draw from this experience. This crisis must guide us to a safer, more resilient and sustainable future. We need to learn to practice more responsibility and human solidarity.
The crisis has hurt the German economy. Currently we estimate a drop of around six per cent in GDP for 2020, but of course that is with many uncertainties.
Germany has adopted the largest assistance package in its history with a volume of up to Euro 750 billion. We just agreed an additional comprehensive stimulus package with a volume of Euro 130 billion. Some refer to this as "the bazooka", but we prefer to call it a "protective shield" for the economy.
The first package aims to protect health, safeguard jobs, support companies and maintain social cohesion. For instance, an assistance programme for small businesses, freelancers and self-employed provides one-time grants to cover operating costs for three months. People saw the money on their accounts in a matter of days. Also, an Economic Stabilisation Fund for larger companies provides liquidity assistance.
Special regulations to subsidise temporarily reduced working hours have been adopted. This helps businesses to hold on to its employees during the crisis. That way, people still receive salaries and the companies will be ready to go with a proven workforce once business picks up again. The additional stimulus package just announced includes a temporary cut in value added tax, funding for local authorities, financial allowance for families, promotion of future technologies such as quantum computing, artificial intelligence, hydrogen power and a cash rebate on the purchase of new environment friendly e-vehicles and plug-in-hybrids. We want to hit the ground running as we come out of this Covid-19 crisis.
The European Union (EU) is the basis of peace and prosperity for Germany. That is why we lay great emphasis on the "Next Generation EU Plan" for a green, digital and resilient Europe. It includes another "bazooka" including at least Euro 800 billion to support member-states. Germany will hold the Presidency of the European Union, starting July 1. Our internal focus will be on health, recovery and making the EU fit for a sustainable future. Externally, we will push for multilateral solutions for global issues and support institutions such as the United Nations and the World Health Organisation to practice global human solidarity.
The crisis showed us that we must be bold. One example is a fresh commitment to make the EU the first climate neutral continent by 2050. Another is the initiative taken by Chancellor Merkel and the President Emmanuel Macron of France to raise emergency funds by an unprecedented joint EU debt issuance.
Germany and the UAE are getting good reviews for reacting effectively. But the real test is yet to come. Our countries are co-operating closely with the goal of emerging #StrongerTogether.
There is a constant exchange to share experience, coordinate efforts and to lay the groundwork for what comes next. The virus will accelerate and deepen global trends. I believe that in partnership Germany and the UAE can be at the forefront of those trends.
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