Virus: Germany will contract 180 billion new debts

Photo of author

By admin

Berlin | Germany will eventually go into debt to the tune of 180 billion euros in 2021, due to the second wave of COVID-19, which has pushed it to extend its restrictions until January, according to the annual budget approved in Bundestag Finance Committee Friday.

Adopted early in the morning, after 17 hours of discussions, this budget provides for a total of 179.8 billion euros in new debt for 2021, and 498.6 billion euros in public spending, according to the final document, consulted by AFP.

Germany will borrow nearly 84 billion euros more than what the finance ministry planned in September, before the arrival of the second wave of COVID-19.

Germany took new restrictions in early November, including closing bars, hotels, and cultural and leisure venues, which are plaguing the economy.

And Chancellor Angela Merkel announced on Wednesday the extension of these measures until January, in the face of a still worrying health situation.

As a result, Berlin has extended for one month the emergency aid put in place in November to support the companies most affected by these restrictions, which weigh on the federal budget.

Direct aid to SMEs and partial unemployment will for their part be paid until next year.

The Bundestag must now meet from December 7 in plenary to approve this budget.

This will once again derogate from the sacrosanct rule of the “debt brake”, enshrined in the German Constitution, prohibiting the federal government from borrowing more than 0.35% of its GDP each year.

Berlin had already contracted a record amount of 217.8 billion euros in 2020, due to the crisis.

But more and more voices are rising in the country for a gradual return to respect for this rule, even within the ruling coalition.

“It is not acceptable in the long term for states to escape their financial responsibility,” warned Eckhardt Rehberg, spokesperson for the CDU (Christian Democrat) at the Finance Committee.

The government assures that its objective is to return to its constitutional rules from 2022.

Berlin anticipates a recession of 5.5% in 2020, before an upturn in activity of 4.4% in 2021 and 2.5% in 2022, ie a return to the “pre-crisis” dynamic.

Leave a Comment