Angela Merkel announces 130 billion euro German stimulus package


“We have an economic recovery plan, a plan for the future and, of course, on top of that, we are now dealing with our responsibility for Europe and the international dimension.” German Chancellor Angela Merkel announced on Wednesday evening a 130 billion euro stimulus package for the 2020s and 2021s aimed at boosting the German economy hit hard by the Covid-19.

Of the $130 billion, “120 billion will be spent on the federal government,” Merkel said at a press conference after two days of meetings between conservatives and social democrats, the partners of the government coalition.

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Although Germany has so far been less affected by the pandemic on a human level than its neighbours, with some 8,500 deaths, its export-dependent economy has been severely shaken.

Double the premium for the purchase of an electric vehicle

Among the measures announced are, in addition to the temporary reduction of VAT and debt transfers from the municipalities to the federal state, an allowance of 300 euros per child for families or new aid for companies in difficulty.

The most discussed point was the introduction of a purchase premium to support the automotive sector, which has been virtually at a standstill for several months. The Social Democrats (SPD), who opposed any subsidy for polluting cars, seem to have won the battle here.

To go further: Germany enters recession

In the end, members of the “grand coalition” voted against a premium for the purchase of low-emission gasoline or diesel cars. On the other hand, the premium for the purchase of an electric vehicle will be doubled from 3000 to 6000 euros.

New business support

This stimulus package is in addition to the huge plan of more than 1000 billion euros put in place in March, at the height of the pandemic, providing aid to businesses and billions of euros of guaranteed loans.

While Germany’s unemployment rate continued to rise in May to 6.3%, prompting companies to apply for partial unemployment for more than 11 million employees since March, the government wanted to re-support troubled businesses.

Read also:
The use of partial unemployment explodes in Germany

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