Note: Current as of 23rd March 2020 - Working Draft
(Source - From Publication on the Internet)
Key Policy Responses
In addition to running down accumulated reserves, the federal government adopted a supplementary budget of €156 billion (4.9 percent of GDP) which includes : (i) spending on healthcare equipment, hospital capacity and R&D (vaccine), (ii) expanded access to short-term work (“Kurzarbeit”) subsidy to preserve jobs and workers’ incomes, expanded childcare benefits for low-income parents and easier access to basic income support for the self-employed, (iii) €50 billion in grants to small business owners and self-employed persons severely affected by the Covid-19 outbreak in addition to interest-free tax deferrals until year-end.
€2bn of venture capital funding for start-ups, temporarily expanded duration of unemployment insurance and parental leave benefits. At the same time, through the newly created economic stabilization fund (WSF) and the public development bank KfW , the government is expanding the volume and access to public guarantees for firms of different sizes and credit insurers , some eligible for up to 100 percent guarantees, increasing the total volume by at least €757 billion (23 percent of GDP).
In addition to the federal government’s fiscal package, many state governments (Länder) have announced own measures to support their economies, amounting to €48 billion in direct support and €73bn in state-level loan guarantees.
In Summary Germany has...
the federal government adopted a supplementary budget of €156 billion (4.9 percent of GDP)
€50 billion in grants to small business owners and self-employed persons severely affected by the Covid-19 outbreak in addition to interest-free tax deferrals until year-end.
€2bn of venture capital funding for start-ups
many state governments (Länder) have announced own measures to support their economies, amounting to €48 billion in direct support and €73bn in state-level loan guarantees.
Receive a short-time work allowance, if a minimum of 10% of your workforce is affected
MONETARY AND MACRO-FINANCIAL
The debt ceiling, which is anchored in German law and limits annual government borrowing, was also suspended in a separate vote on Wednesday. It means the government can take on another €156 billion in 2020 as part of the aid package.
The ECB decided to provide monetary policy support through (i) additional asset purchases of €120 billion until end-2020 under the existing program (APP), and (ii) temporary additional auctions of the full-allotment, fixed rate temporary liquidity facility at the deposit facility rate and more favorable terms on existing targeted longer-term refinancing operations (TLTRO-III) between June 2020 and June 2021.
the ECB introduced a new liquidity facility (PELTRO), which consists of a series of non-targeted Pandemic Emergency Longer-Term Refinancing Operations carried out with an interest rate that is 25bp below the average MRO rate prevailing over the life of the operation. The PELTROs commenced in May 2020 will mature in a staggered sequence between July and September 2021.
Further measures included an additional €750 billion asset purchase program of private and public sector securities (Pandemic Emergency Purchase Program, PEPP) until end-2020
According to information from SPIEGEL, the federal government is planning a lavishly equipped rescue package for the self-employed and small entrepreneurs with up to ten employees who are affected by the consequences of the corona crisis. It plans to make a total of 40 billion euros available for this. Ten billion euros of this is to be given as direct grants to distressed one-person businesses and micro-enterprises, the rest of 30 billion euros as loans.
Further more the
Germany's lower house of parliament has approved a €750 billion ($814 billion) aid package on Wednesday to cushion the economy from the direct impact of the coronavirus outbreak.
Germany's economy ministry on Monday (25-05-20202) unveiled plans to ramp up support for hard-hit smaller companies, proposing as much as €50,000 in monthly aid to help the nation's vaunted "Mittelstand" survive the coronavirus crisis.
launched a huge rescue package worth €1.1 trillion to steer the country through the coronavirus-induced downturn, even ditching its cherished policy of maintaining a balanced budget to finance the stimulus.