The economic crisis in Germany: government support for enterprises
The coronavirus epidemic has caused enormous damage to the world market and affected all countries, including developed ones. The economic crisis in Germany could have a serious impact on GDP, which will drop by about 5%. This is evidenced by statistics – the unemployment rate is rising and is likely to reach 5.6% by the end of the year.
The coronavirus outbreak has hit the country. To prevent the spread of the disease, the government had to take tough measures that froze some of the processes in the economy. This period was helped by a pre-prepared financial cushion, which supported the public sector. It was about 1.2 billion euros, which is 30% of German production. However, this move could not secure absolutely all sectors, and since March there has been an increase in unemployment. By the end of the year, the economy will decline by 4.5-5%.
The German government has put in place the largest anti-crisis package in the history of the state. It includes a program to support small businesses and self-employed people, who are provided with financial assistance worth a total of 50 billion euros. This money has been allocated from the additional budget, which amounts to 156 billion euros. In addition, Germany plans to receive part of the funds from the sale of government bonds, which are already traded on the stock market.
The first three months after the outbreak of coronavirus German enterprises, whose staff up to 5 people, paid a one-time payment of 9 thousand euros. Companies with no more than 10 employees received 15 thousand financial aid. With this money, the business owners will be able to cover part of the rent, to pay for loans and equipment that was leased. Germany is a federal state, so measures to support business have been taken not only at the governmental level, but also to manage the federal land.
Taking all factors into account, the country’s budget was revised and increased by 43%. It now stands at €362 billion. In order to increase the amount of funds, the Government has abandoned the deficit-free budgets, which were in force for 7 years.
While the banking sector suffered the most damage during the 2008 crisis, the current one has hit small businesses. In Germany, as in other countries, the service sector was affected – a large number of restaurants, beauty salons, hotels and travel agencies had to stop working during the epidemic and not everyone could recover from it. Therefore, the state’s finances were directed precisely at such small firms. The funds were provided in the form of assistance, and business owners should not repay them in the future.