Germany has announced a €130 billion recovery package to tackle the recession caused as a result of the Coronavirus pandemic in an attempt to resume economic activities. This will be a package comprising of tax and spending measures. Being Europe’s largest economy, this package is touted to have sweeping tax cuts, as well as increase benefits, in an attempt to help with economic rejuvenation.
This package includes the following features:
- A temporary VAT cut from 19% to 16%, from 1 July until 31 December
- A €300 one-off payment for every child in the country
- A €50bn fund to address climate change, innovation and digital technology›
- A €25bn loan support programme for small firms that have seen their sales drop by more than 60% for June to August. This could be a particular boost for bars, restaurants, hotels and other hospitality businesses.
- €10bn for municipalities struggling with lower tax receipts, with public spending on infrastructure and housing
Germany’s chancellor Angela Merkel said a “bold response” was required to secure jobs and keep the economy running, since the country was experiencing massive unemployment due to recession.
This package comes as an addition to the already announced €750 billion, to cushion the blow to the economy. It included loan guarantees and direct spending measures such as furlough wage subsidies.