NAfter the nationwide demonstrations against the corona restrictions, politicians from almost all factions warn against the protests being taken over by extremists. “We do not allow extremists to use the corona crisis as a platform for their anti-democratic propaganda,” said CDU general secretary Paul Ziemiak in an interview on Monday. SPD leader Saskia Esken said that anyone who denies the pandemic and calls for a violation of protective regulations takes advantage of the uncertainty of the people “shamelessly”.
At the weekend, thousands of people in Berlin, Stuttgart, Munich and other German cities demonstrated against the corona restrictions. Infection protection requirements were repeatedly disregarded.
“Transparency, education and information”
Ziemiak told the “Augsburger Allgemeine” that the CDU as a People’s Party always takes citizens’ concerns seriously. But it was also clear that “we are taking action against those who are now fueling citizens’ concerns with conspiracy theories and circulating fake news.” The government will continue to counter this “irresponsible action” with transparency, clarification and information.
Esken said spreading false messages about the corona pandemic was aimed at “destabilizing and dividing society.” She also called to respond with “enlightenment”. She also appealed to those citizens who approved the restrictions.
“Looking away and being silent doesn’t help. We have to stand up to this and prove to be arguing democrats, ”the SPD leader told the newspapers of the Funke media group. She cited online initiatives or discussions with colleagues as examples.
The domestic spokeswoman for the SPD parliamentary group, Ute Vogt, called the protest against the corona measures in the “world” a “found food” for right-wing radicals. They tried to take advantage of the dissatisfaction with the conditions.
Greens Vice-Group leader Konstantin von Notz told the newspaper “Die Welt” that it was “legitimate and self-evident to question measures and express resentment”. The demonstrations also included those who “fundamentally question the system” and who viewed politicians as a whole as puppets of billionaires George Soros and Bill Gates.
Baden-Württemberg’s interior minister Thomas Strobl (CDU) announced, according to “Welt”, that demonstrators would have to expect the protest to be resolved in the future if the corona protection regulations were violated.
AAs a nationwide pioneer in the Corona crisis, restaurants in Mecklenburg-Western Pomerania have reopened since Saturday. “I see a lot of colleagues who breathe a sigh of relief and guests who are satisfied,” said Lars Schwarz, President of the regional industry association Dehoga MV. This day is a bright spot after a difficult time with losses of many millions of euros that have not yet been calculated. He expects that on Saturday about a third of the approximately 5,000 companies in the country with their 55,000 employees will use the opportunity to open up.
It would not have been better for innkeepers like Peter Weide from Restaurant Vielmeer in Ostseebad Kühlungsborn: As in large parts of the state, the sun shone after cool weeks and an unpleasant north wind, and there was a mild wind. From Weide’s point of view, the first hours of the test run after seven weeks of closure went well, and the guests from the region were satisfied – even if they were operated by the service staff with a mouthguard. A guest per table must also leave their data in order to be able to understand if a new infection should occur.
Then stop currywurst instead of tarte flambé on Mother’s Day
Prime Minister Manuela Schwesig (SPD) announced on Monday the possibility of opening restaurants for residents of the country. The extremely low infection rate in the northeast provided her with the opportunity. According to industry estimates, everyone will open at Pentecost at the latest, because then guests from the other federal states can come back to Mecklenburg-Western Pomerania. However, counties were excluded in which the corona crisis has not yet been sufficiently limited.
“The announcement came as a surprise – also for our wholesalers,” says Weide. They should have gotten their employees out of short-time work first. For his restaurant with 27 employees, this means that the menu is reduced to just a few dishes. The mood among the maximum of 80 guests was still good, they were happy to be able to sit in the sun in this atmosphere. “Then there must be currywurst and tarte flambé on Mother’s Day,” said Weide, referring to Sunday.
The good mood is clouded on Saturday in Sellin on Rügen, “the weather doesn’t play along,” as Tobias Moritz from the wine industry says. Drizzle prevented the guests from taking advantage of the possibility of foreign trade. “We are completely reserved for this inside in the evening.” Due to the distance regulation of 1.50 meters between strangers, only a maximum of 30 guests can fit in instead of 70. In addition, they will only be able to sit in the restaurant until 9 p.m. This is required by the new regulation of the state government.
On the other hand, around 30 kilometers further north in Sassnitz, the sun is shining, which makes Thomas Kursikowski shine from the sea banquet. No sooner had he opened the doors than the first guests came. “They were waiting for it.” Kursikowski was also lucky, he says himself. Because he was able to offer his guests fresh garfish and corn plaice with asparagus. “A wonderful moment after these bitter times.”
The coastal towns on the Baltic Sea are also trying to return to a form of normalcy. On the coast in Schleswig-Holstein, significantly more visitors were on the road again for the first time on Saturday. Guests strolled everywhere again on the promenades of Niendorf, Timmendorfer Strand and Travemünde. Sun-seekers lay on the sand on the beach, children played on the still cold water.
It is the first weekend on which all second home owners and long-term campers were allowed back, explains Kristina Wenske from the tourism service in Timmendorfer Strand. In addition, significantly more Schleswig-Holsteiners came to the coast for a day. However, hotels and restaurants are only allowed to reopen from May 18 – then guests from other federal states may also return to the coast in Schleswig-Holstein. Bookings were already going up steeply from the 18th, said Wenske.
From that day on, the beach chair renters can again offer their baskets – under strict conditions, as a landlady explains. So now she has received the information that the beach chairs are 3.5 meters apart and must always be disinfected. You then have to see how this can be done and how many baskets she can set up under these conditions.
Other Germans have to be patient a little bit until the next step towards normality. In Bavaria, for example, restaurants are allowed to reopen their outdoor areas on May 18. Baden-Württemberg also plans for this day. In North Rhine-Westphalia and Lower Saxony the time has already come next Monday. The target is May 15th in Berlin.
Brandenburg’s Prime Minister appeals to the Polish government.
Potsdam, Frankfurt (Oder) Brandenburg’s Prime Minister Dietmar Woidke (SPD) has asked Poland to relax the strict corona rules for commuters who work in Germany. “In my view, commuters should have the opportunity to get to their jobs on the other side of the border,” wrote Woidke, who coordinates German-Polish cooperation for the German government, to the Germany coordinator in Poland, Bartosz Grodecki.
He campaigned for pragmatic solutions if the restrictions were extended. The “Märkische Oderzeitung” from Frankfurt (Oder) reported on Saturday. The national conservative government of Prime Minister Mateusz Morawiecki closed the borders for foreigners in the middle of March in the fight against the coronavirus pandemic.
Commuters must return to Poland for two weeks of domestic isolation after returning to Poland. According to the Chamber of Commerce and Industry (IHK) in southern and eastern Brandenburg, this affects more than 25,000 commuters in Brandenburg and Berlin. Brandenburg supports the commuters financially.
On Friday evening, protests against the border closure occurred on both sides of the German-Polish border. Around 300 people took to the streets in the neighboring town of Ggorlitz, Zgorzelec, the PAP news agency reported.
There were demonstrations in the border towns of Slubice near Frankfurt (Oder), Rosowek in West Pomerania and Gubin in Lower Lusatia, each with more than a hundred participants. According to the police, the protests were quiet.
“Think of a common economic region”
“The region is split in half, which makes life very difficult for many people in the border area,” said Marta Szuster, a spokeswoman for the protests in Rosowek to the news agency. According to police, around 50 people, including schoolchildren and commuters, demonstrated in Frankfurt (Oder) against the closure of the Polish border. This demonstration was also trouble-free.
Woidke wrote in the letter to Poland: “The German side understands the border controls that Poland has introduced. But we also have to keep in mind that the border cuts through a common economic region. ”
Last weekend, when the Germany coordinator was appointed in Warsaw, the head of government advertised that the partnership would not be damaged by the corona pandemic.
More: Since the corona crisis, calls for a strong state have been increasing. The Polish government is just about right. Other EU countries are reacting with caution.
A soldier with a face mask as a measure against the corona virus stands armed on a street.
Berlin In view of the ongoing violence in Libya, Federal Foreign Minister Heiko Maas, together with his colleagues from France and Italy, and the EU foreign policy officer, made an appeal to the parties to the conflict. In a joint statement on Saturday, they expressed concern about the situation in the North African civil war country.
At the same time, they called on those involved to be inspired by the spirit of the fasting month of Ramadan that had just begun and to resume talks about a real ceasefire. In the interest of the whole country, the Libyan actors should act together against the common enemy – the coronavirus pandemic.
“The conflict continues unabated and developments in the past few weeks have increased concerns, particularly with regard to the long-suffering Libyan population,” said the statement by the SPD politician Maas, the Frenchman Jean-Yves Le Drian, the Italian Luigi Di Maio and the EU’s External Representative Josep Borrell.
They reaffirm their commitment to the decisions of the Berlin Libya conference in mid-January and support the call for a humanitarian ceasefire by UN Secretary General Antonio Guterres and UN Special Envoy Stephanie Williams.
A violent civil war has been raging in Libya for nine years. The fighting around the capital Tripoli had recently intensified. According to the UN, there have been more than 850 violations of the ceasefire negotiated in mid-January. At that time, Germany had held a conference to mediate between the conflicting parties.
More: The EU countries have approved the operation to monitor the UN arms embargo against Libya. It is intended to replace the “Sophia” operation.
Who did Merkel mean? This is how the countries react to Merkel’s criticism
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The Federal Chancellor criticized the federal states’ plans to ease the Corona crisis as “very researched in parts, if not to say researched”. But officially hardly anyone feels addressed.
NAfter the criticism of Chancellor Angela Merkel (CDU) about the research of some federal states in loosening corona, some prime ministers feel explicitly not addressed. Mecklenburg-West Pomerania’s Prime Minister Manuela Schwesig (SPD) said this to “Bild live”. “We are the country in Germany with the fewest infections and are now gradually opening the door again.” Therefore, the Chancellor with Mecklenburg-Western Pomerania “has no need”.
Merkel had said in her first government statement on the Corona crisis in the Bundestag on Thursday that the implementation of the opening decisions was “partly very brisk, if not to say brisk”. The Chancellor did not say which countries she meant.
Merkel’s government statement
Bavaria and Baden-Württemberg also do not feel addressed by Merkel’s criticism. They are the cautious in Germany, said Bavaria’s Prime Minister Markus Söder (CSU) on Thursday before a meeting with his counterpart Winfried Kretschmann (Greens) in Ulm. In the two federal states, the process is “somewhat more prudent” than in some other countries.
Kretschmann said of the slowdown in the spread of the coronavirus in Germany, “it is not time now to deceive ourselves to be deceptive security just because it has gotten better – if we become careless now, the pandemic can come back with full force “.
The head of government of Baden-Wuerttemberg said this expressly also with regard to demands from the economy for easing the measures.
The Rhineland-Palatinate head of government sees things similarly for themselves and their federal state. There is “no reason to point to Rhineland-Palatinate,” said Malu Dreyer (SPD) on Thursday on the ZDF program “Maybrit Illner”. “We are actually implementing the resolutions that we discussed together.” These resolutions would also be taken into account when reopening an outlet center in Zweibrücken, Dreyer said.
Merkel announced on Thursday evening that she and the prime ministers will probably not decide on further steps until May 6. The switch conference already announced on April 30 will also be held, but other issues will be dealt with there.
Merkel justified this by saying that shops only reopened in the first countries last Monday, in other countries this would not be the case until next Monday. The effects can only be estimated in 14 days. “That means we can talk about these questions on May 6th.”
Occupational safety is even more important than usual in the Corona crisis. A proposal from the relevant ministry for professional football is causing a stir in this context. It is about the continuation of the Bundesliga with a face mask.
The Federal Ministry of Labor proposes in an internal paper that the football professionals restart the Bundesliga Wear protective masks. It quotes the news magazine “Spiegel” on Friday from the tripartite statement of the Department of Occupational Safety and Health on the hygiene concept of the German Football League (DFL). The medical masks should not slip and would have to be changed every 15 minutes.
Bundesliga could continue in May
As an alternative, it is proposed that all teams, including coaches and supervisors, be kept in permanent until the end of the season quarantine to send, for example in a hotel. The Ministry of Labor confirmed on “Spiegel” demand that the paper was created in the department. However, it is a “first draft”, the minister Hubertus Heil (SPD) did not exist.
The DFL had its plan for a resumption of the season in the Bundesliga and 2nd league presented under strict hygiene conditions and regular corona tests. Possible The restart date is May 9th. Political approval is a prerequisite.
Berlin EU Justice Commissioner Didier Reynders rejects vouchers for canceled trips in the corona crisis. He has now given a clear rejection of the corresponding plans of the federal government. “Member States have to ensure that national decisions are in line with EU law – and that gives consumers the choice between vouchers and reimbursement” Reynders told the “Frankfurter Allgemeine Zeitung”.
The EU Package Travel Directive requires repayments to be made within 14 days. According to the will of the federal government, consumers should receive vouchers instead of an immediate repayment when the trip is canceled. The vouchers are to be limited until the end of 2021. If the customer has not redeemed his voucher by then, the organizer must refund the value.
Justice Minister Christine Lambrecht, Minister of Economic Affairs Peter Altmaier (CDU) and Minister of Finance Olaf Scholz (SPD) had already written to Reynders because a voucher solution would have to be approved by the EU Commission. Several other countries also wanted to contact the Commission.
Altmaier had spoken on Thursday to talks with the EU Commission about a uniform regulation for Europe. The reason: For many travel providers, it would be important to be able to issue vouchers now instead of having to refund the money because of the current crisis and the travel restrictions imposed. In this way, their liquidity can be secured in the crisis, Altmaier told the “Bild” newspaper. For customers who are acutely dependent on repayments, there will be a hardship regulation.
The EU Justice Commissioner rejects compulsory vouchers.
The President of the German Travel Association (DRV), Norbert Fiebig, had recently described the situation of companies in the travel industry as “more than just a threat”. According to the DRV, the travel industry in Germany has to cope with a drop in sales of 4.8 billion euros from mid-March to the end of April alone. 3.5 billion euros are currently flowing out of companies for customer repayments at short notice.
Encouragement instead of commitment
“This leads to an unacceptable economic imbalance,” warned Fiebig. “If Brussels continues to hesitate, the German government will have to take action again and take steps to protect the travel industry very quickly at the national level,” said the DRV President. “If tour operators slip into bankruptcy in large numbers, vacationers will lose a lot of money.”
EU Commissioner Reynders advocated “pragmatic and attractive solutions for companies and consumers”. However, this could only be to encourage consumers to accept vouchers, not to oblige them to do so. Vouchers accepted voluntarily should also be refundable if they were not used and insured against the insolvency of the provider.
The federal government had asked the EU Commission for an exemption from the crisis, since the obligation to reimburse also leads to high cash outflows for airlines because of the almost total collapse in passenger air traffic. To this end, the EU government has presented a detailed proposal with deadlines and hardship regulations. To do this, the EU regulation on passenger rights would have to be changed.
However, the Commission does not want to know anything about a derogation. The FAZ quoted a spokesman for the authority, saying that the legal requirements also apply in unavoidable and extraordinary circumstances, such as those that exist in a pandemic.
More: Read here what consumer advocates think about the voucher solution for canceled trips.
Frankfurt’s Abu Bakr Mosque Image: Wolfgang Eilmes
The Muslim month of fasting Ramadan has begun. As a “small consolation”, the city of Frankfurt allows some mosque communities to call for prayer – because prayer and breaking the fast should not take place during the crisis.
WDuring Ramadan, some Frankfurt mosque congregations will replace their Friday sermons with a call to prayer. As integration director Sylvia Weber (SPD) said, the Muslims will not meet this year to pray and break the fast. The call to prayer should be “a little comfort”. Please ask “to meet a short muezzin call with the respect that freedom of religion can always claim in our democracy”. The reputation must nevertheless adhere to the applicable immission control laws.
Hanover, Duisburg, Osnabrück and several other cities had previously allowed Muslims in the Corona crisis to transmit the call to prayer “Adhan” publicly via external speakers.
The Islamic call to prayer “Adhan” is traditionally called in Arabic to call the community prayer by the muezzin and to pray on Friday. In large mosques it is called from the minaret, in small mosques from the door or from the side of the building. This is done through loudspeakers. The “adhan” is usually used to call the faithful to the place of prayer. A common prayer will not be possible in the crisis.
The Chancellor is in top form in times of corona crisis. Angela Merkel explains complicated population doubling rates and reproductive numbers. But she also knows everyday things. “They have to be washed or ironed regularly, put in the oven or in the microwave,” Merkel explains how to care for respiratory masks. “Even if that sounds a bit housewife, so to speak.”
The omniscient state – embodied in the chancellor. The subjects are explained life down to the smallest detail. With this self-image, Merkel takes “measures that have never existed in our country before”. Fundamental rights are restricted, the economy is pushed to the brink and then supported with unprecedented aid.
One of Merkel’s closest confidants, Peter Altmaier, is more than enthusiastic. “An uncle who brings something is better than an aunt who plays the piano”, the Federal Minister of Economics remembers of his childhood.
And what is brought along! If you add up everything the federal government now wants to offer to combat the corona crisis, you get a gigantic sum of at least 1.2 trillion euros. No other country in the world has raised so much money in relation to its economic strength.
Germany has a full 35 percent, far more than the EU average or the USA. Federal finance minister Olaf Scholz did not understate what he promised a few weeks ago: “It is not spilled, but padding.”
The increase in importance and power is unique. Never in the history of the Federal Republic has a government intervened so quickly and deeply in public life and thus in the economy. After the financial crisis, German government debt rose by 315 billion euros in one year. The value of the federal, state and local governments will be far exceeded in this crisis. “I am worried whether we will be able to return to normal economic policy,” says Lars Feld, Germany’s top economy.
The measures to protect health are understandable. But the question increasingly arises: what side effects do the multi-billion dollar rescue programs have? The free market is disturbed, competition is distorted, prices lose their signal strength.
“As much market as possible, as much state as necessary”, the famous words of former Federal Minister of Economics Karl Schiller lose their meaning every day.
There is a risk of higher prices, inefficient companies and loss of wealth. It is significant that more and more companies are turning to the Bundeskartellamt during the corona crisis in order to be exempted from cooperating with competitors. The new spirit of state economy speaks.
Spend as much as you can. The year 2020 will be disastrous. Kristalina Georgiewa (IMF chief)
Certainly, help for companies with no fault of their own must be provided. But with the flood of support funds, the risk of misallocation is high. Capital and labor are tied up in companies with below-average productivity, less investment and innovative strength.
A few weeks ago, after a parliamentary request from the FDP for possible support from zombie companies, the Federal Ministry of Finance had to admit that “necessary market processes of creative destruction are hindered”.
The concern is justified that the state is eating itself too deeply into the economy, throwing privacy and data protection partially overboard and that the influence on the market will not be reversed after the end of the crisis.
A look at history suggests little good. The federal government is still 25 years after the IPO Deutsche Telekom still the largest single shareholder.
Fundamentally, there is a problem that is known in the economy as moral hazard: companies and citizens behave irresponsibly or carelessly due to existing false incentives. The news of fraudsters sneaking up subsidies is increasing.
“The state is a lousy entrepreneur”
The appearances of Altmaier and Scholz are characterized by superlatives. At the federal press conference, they will be presenting the rescue packages worth billions to the public with great regularity. “This is the most comprehensive and effective guarantee that there has ever been in a crisis,” said Altmaier in mid-March. “This is the bazooka, we’ll look for small arms later,” the Federal Minister of Finance said at the appearance.
The small arms that have now been added are quite large-caliber. Scholz announced a debt-financed supplementary budget of 156 billion euros. This includes an emergency fund with a volume of 50 billion euros, which is aimed at the self-employed and small businesses with up to ten employees.
The federal guarantee for the state bank KfW is increased by up to 450 billion euros. And then there is an Economic Stabilization Fund (WSF) with a volume of 600 billion euros. The majority is earmarked for government guarantees to keep companies liquid.
100 billion euros are reserved for possible investments, i.e. partial nationalization of companies. The battered Lufthansa is already holding talks about state participation.
You can still hear Altmaier’s words: “The state is a lousy entrepreneur.” The Federal Minister of Economics at least dedicated the most beautiful hall in the ministry to Ludwig Erhard. But he is currently just as far away from Erhard’s mantra as the Germans are from summer leaves in Mallorca.
Minister of Economics Peter Altmaier (standing) and Minister of Finance Olaf Scholz (front)
The father of the “German economic miracle” throbbed to measure, he remembered sentences, the state should not be a player, but an arbitrator in the economy. Now the state is preparing to take over the entire football club.
No other industrial country is helping its economy with such large sums as the Federal Republic. This shows a new evaluation by the International Monetary Fund (IMF). He does not criticize Germany, on the contrary. “Spend as much as you can,” advises IMF chief Kristalina Georgiewa. The economic situation is too depressing.
The Council of Experts is now assuming that the economy will decline by more than 5.5 percent this year. This is the case that was previously treated as a worst-case scenario. The economic downturn would be worse than in the global financial crisis. 725,000 companies have registered financial difficulties and short-time work.
Including: hospitals. Health Minister Jens Spahn ordered them at the beginning of March to postpone all planned operations. For the hospital operator, this means severe revenue losses. More than a third of the intensive care beds are not occupied. With the Hospital Relief Act, the federal government created a regulation to compensate the clinics for the failures. But that’s far from enough.
This is the bazooka, we’ll look at small arms later. Olaf Scholz (Federal Minister of Finance)
Some private organizations have registered short-time work, including the Schön-Klinik group. The head of the German Hospital Society, Gerald Gaß, sees the time for a “careful, gradual resumption of regular care”.
Spahn also said last week that clinics could “gradually return to normal”. “We do not want to keep 40 percent of the intensive care ventilation beds in Germany permanently”, said the minister.
The pressure on the companies is huge, the need for help is great. This year alone, the federal government is raising 156 billion euros in new debt. The federal states are also preparing an extensive flood of money for pumps.
According to a survey by the Handelsblatt newspaper among the 16 state finance ministries, they are currently planning 65 billion euros in new debt to fight the crisis. In addition to the federal government’s huge € 1.2 trillion rescue package, the federal states are also helping their companies and the self-employed. Bavaria alone has launched a fund with 60 billion euros.
The IMF chief not only welcomes the gigantic aid package in Germany, the monetary fund also calls for thorough control. “Keep the bills,” said Georgiewa. Transparency and accountability should not be put off in the face of the crisis. Whether Germany is world champion in this discipline, doubts are increasing.
Risk zombie company
The financial crisis shaped a saying by the former head of central bank in Europe, Mario Draghi: “What ever it takes”. In this crisis, it becomes a “Whatever, take it!” Aid is mostly spent without checking, the money cannot be distributed quickly enough.
According to an overview by the Ministry of Finance and the Ministry of Economics, over 26 billion euros were applied for by KfW Hilfen. Almost 13,000 of the more than 13,200 applications were approved. In other words, almost anyone who wants help gets it, most likely companies that didn’t have a working business model before the pandemic.
This easily creates zombie companies that are only alive because of generous state aid. After all: With the large sums, the KfW steering committee seems to be examining it more closely. So far, around 8.5 billion euros have been approved. So it takes a little longer for the large-volume applications.
In contrast, the self-employed and small businesses with up to ten employees are suspiciously fast. So far, according to the overview of 1.65 million applications, around 1.1 million have been approved and more than nine billion euros paid out. These are not loans, but aid that does not have to be repaid.
“Speed and thoroughness go hand in hand: it is carefully checked who receives the money,” Finance Minister Scholz promised. But is that true? North Rhine-Westphalia and Berlin were even recently forced to suspend immediate payments because large-scale fraudsters wanted to get to the pots.
There are also problems with honest entrepreneurs. In North Rhine-Westphalia, for example, the self-employed and small businesses are always granted the maximum amounts of EUR 9,000 and EUR 15,000 – regardless of need. This practice is not well understood in the Federal Ministry of Economics. Because a flat-rate payment of maximum amounts was actually not intended.
The aid should amount to up to 9,000 euros for companies with up to five employees and up to 15,000 euros for up to ten employees. The emphasis here is on the “up to”. According to the Ministry of Economic Affairs, the actual amount should be based on sales and operating expenses for the next three months. An entrepreneur with zero euros turnover and 1000 euros costs would be entitled to 3000 euros in emergency aid.
But these details were lost somewhere in the confusion between the federal states and the federal states. The up to 50 billion euros are provided by the federal government. Although federal money is at stake, it is up to the federal states how much they scrutinize companies. In Hamburg, for example, a liquidity check is required. Other countries are significantly less strict so that aid can flow as quickly as possible.
In Berlin, more than a billion euros were paid out to solo and small entrepreneurs within days. And the Berlin Senate also admits behind the scenes that surely there are also deadweight effects. Since no examination was carried out, almost everyone received 14,000 euros in a combination of federal and state funds. These include the self-employed, who normally have annual sales that are significantly lower, they say.
Some recipients are now voluntarily repaying the aid for fear of sanctions. But whether a subsequent thorough examination is possible to convince fraudsters is skeptical in financial management.
Dangerous false incentives
The economic nonsense, which is operated partly in the name of Corona, is great. Governments in the federal and state governments are increasingly creating the illusion that they can regulate everything with state trillions. And more and more, government intervention and expansion is creating false incentives in all areas of the economy, which can be revenged bitterly.
Take the housing market as an example: the Federal Minister of Justice, a woman from the SPD, wanted to protect the tenants. The result is a half-baked law that gets small landlords into trouble. The law was so badly made that solvent companies like Adidas or Deichmann used the gaps and simply suspended the rent payments. Only after a storm of indignation did Adidas row back.
Take the example of KfW loans: After the institutes hesitated to pass on the subsidized loans from the Staatsbank KfW to companies because they still had to bear ten percent of the default risk, the state assumed full liability. With the danger that house banks will now be able to provide loans to companies that have long been bankrupt.
The banks don’t care, they are released from any liability, but of course they still make good money from their business. The fool is the taxpayer who has to answer for the defaults.
Example of short-time work: Short-time work allowance is a tried and tested crisis instrument. The state replaces up to 67 percent of net wages. However, the SPD was not enough. In the coalition committee on Wednesday, she pushed for an increase to 80 percent.
It is the most comprehensive and effective guarantee that there has ever been in a crisis. Peter Altmaier (Federal Minister of Economics)
However, a general increase would have significant deadweight effects: Many companies are already increasing short-time benefits from their own resources. Apart from that, the short-time work allowance is not meant to secure the standard of living, but rather to ensure the survival of companies and thus avoid unemployment.
In other areas, the federal corona strategy is rather arbitrary. The craft complained that the vehicle registration offices were closed. There is also much discussion about opening shops up to the limit of 800 square meters. This border was communicated at least improperly and caused confusion and indignation among the shopkeepers.
Now a Hamburg administrative court has declared the 800 square meter rule to be illegal. The court could not understand why opening larger sales areas alone should attract more people to the city center. Necessary infection protection measures could be followed at least as well in larger stores as in smaller facilities.
Whimsical and impractical was initially the requirement that repair shops were allowed to remain open, but the sales rooms had to be closed. Many craftsmen wondered if they could lead the customers through the sales room into the workshop. Another detail from this series of undesirable side effects of the rescue policy.
The border closures, for example with the Czech Republic, mean that the bricklayers are missing in the construction industry and the harvest workers in agriculture from Romania. The state decides a lot, but the consequences are borne by the entrepreneurs and their employees.
The argument for the state’s rapid generosity in the crisis is: rather spend more now to prevent the economy from crashing and millions of jobs be lost than have to finance mass unemployment for a long time. This approach is absolutely correct. But it also remains true: somehow the state rescue billions have to be financed at least in the medium term if the next generations are not to be overwhelmed.
Currently this is done through the use of reserves and debts. Germany certainly has scope. The Federal Republic had just pushed the debt level to below 60 percent, thereby meeting the Maastricht criteria for the first time in many years in 2019. But that will be the last time for a long time.
As a result of the corona crisis, the federal government expects a general government deficit of 7.25 percent of gross domestic product (GDP) this year. The debt ratio as a share of all debts in GDP is estimated at 75.25 percent, as can be seen from the German Stability Program 2020.
“The projection is currently subject to very high levels of uncertainty,” says the current report. In other words, the debt level could be even higher. This mainly depends on how high the losses are that the federal government will incur from its guarantees and sureties.
Given the huge commitments, some in the grand coalition are trying to put the brakes on. “I don’t like the fact that we almost always get new suggestions every hour, what else can you do,” said Union leader Ralph Brinkhaus. “All of this must also be paid for.”
In a crisis, the state’s money is loose. Some sense their chance to finally implement long-held plans.
BerlinDaimler– HR Director Wilfried Porth didn’t gloss over anything: “Obviously something is breaking away at the moment that no one knows if it can be caught up,” the manager said last week. The carmaker had to accept a drop in profits of almost 80 percent in the first quarter, sales of the core brand Mercedes decreased by 15 percent. “The fact that we will need to adjust is obvious,” said Porth. He didn’t say the word job cuts. But even before Corona, Daimler had decided to cut up to 15,000 jobs.
The fear of jobs is back in Germany and the virus pandemic will leave deep marks on the job market. Every second company is already doing short-time work. According to a survey by the Ifo Institute, almost a fifth of the companies want to lay off employees or not to extend temporary jobs.
“The fear of jobs seeps in,” says Ifo economist Klaus Wohlrabe. The job cuts plans are apparently based on the concern of many companies that the restrictions on public life in the corona crisis will not end in May.
On average, the companies surveyed expected four months of partial standstill. 84 percent feel a drop in sales due to the corona crisis, only four percent register a growing business. According to the Federal Employment Agency (BA), almost every third of the 2.2 million companies with at least one employee who is subject to social security contributions have registered short-time work.
Previous employment forecasts are becoming more and more waste every day that the corona crisis continues. “For the labor market, we expect unemployment to rise sharply over the next few months. But many companies keep their people, you can see that from short-time work, ”says Enzo Weber from the Institute for Labor Market and Vocational Research (IAB).
BA boss Detlef Scheele expected a rise in unemployment by 150,000 to 200,000 people in April a month ago. The Nuremberg authorities will present the current data next Thursday.
Domestic demand collapses
There is hardly any improvement in sight if you look at the economic development: the purchasing manager index of IHS Markit has plummeted. In the survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey. “Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith.
“Demand levels will not return to pre-crisis levels anytime soon,” says Sascha Haghani, head of the global restructuring practice at management consultancy Roland Berger. That’s about it GfKConsumer barometer, which measures consumer mood, plummeted to a record low.
“Sooner or later the companies will have to adjust their costs accordingly,” Haghani expects. Probably also through job cuts: According to the IHS, more jobs were cut in the service sector than at the height of the financial crisis recession in April 2009, and the reduction in personnel is also accelerating in industry.
The Ifo survey also shows how wide the shock waves are spreading in the economy: in industry and service providers, almost every fifth company wants to lay off employees or not to extend temporary jobs. It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. Leading economists such as the head of business practices, Lars Feld, are starting to adjust their forecasts for 2020 downwards.
After Chancellor Angela Merkel and the Prime Ministers decided a slow restart of the economy last week, he expects gross domestic product (GDP) to shrink by at least 5.5 percentage points in 2020. Even in the economic institutes, which predicted a minus of 4.2 percent for 2020 in their joint forecast two weeks ago, it is now expected that a five will be before the decimal point.
The IAB had anticipated a 4.7 percent decline in GDP in March, when the economy largely stands still for two and a half months and only normalizes by the end of the year. In this case, the number of unemployed could temporarily rise from the current 2.3 million to more than three million, the Nuremberg researchers predicted at the time.
A well-known restructuring expert expects Corona to increase unemployment to as many as four million people. Especially badly hit sectors such as tourism and gastronomy are affected, but also important branches of industry such as the automotive suppliers.
The government is obviously also assuming a long period of weakness on the labor market. For example, for all unemployed people who would slide into Hartz IV between May and December, the duration of the unemployment benefit will be extended by three months. “Those who are just becoming unemployed or who have recently become unemployed currently have little chance of finding a job again,” said Labor Minister Hubertus Heil (SPD).
In order to counter the allegations made by the unions, in particular, that politicians are more concerned with companies than with employees, the coalition committee also decided on Thursday night to increase the short-time work allowance – staggered according to the duration of benefits.
It is currently 60 percent of net income and 67 percent for employees with children. From the fourth month in Corona short-time work, employees whose working hours are reduced by at least half are now to receive 70 or 77 percent. From the seventh month, the rates increase to 80 to 87 percent.
In addition, short-time workers who take up another job can earn up to the amount of their previous monthly income. So far, this was only true for “systemically relevant” activities such as care or agriculture.
The gradual increase in short-time work benefits has met with criticism: “I would have preferred a faster increase, especially for low-wage earners,” said Sebastian Dullien, head of the Institute for Macroeconomics and Business Cycle Research (IMK). In a survey, 40 percent of employees who were on short-time work said that they would get by with the money for a maximum of three months.
Employers see “contribution club”
The decision met with a mixed response among the unions, which had hoped for a general increase to 80 or 87 percent from the start. “This protects many employees from existential hardships,” praised IG Metall boss Jörg Hofmann. On the other hand, the chairman of the Food, Beverage and Catering trade union (NGG), Guido Zeitler, declared that the increase was correct, but was too small and too late.
In the hospitality industry, employees could probably only expect 80 percent of normal net wages in October 2020. According to the NGG calculations, according to the new plans, a cook in Berlin will have around 1,070 euros instead of around 920 euros and short-time work from around 1,220 euros from the seventh month. “For hundreds of thousands of people with low incomes, the only thing left to do is to apply for Hartz IV,” said Zeitler.
IAB labor market expert Weber also criticizes the fact that the planned changes will not benefit employees in the low-wage industries in a very targeted manner. “In the end, industrial sectors that have long been in recession could benefit in particular.”
For Holger Schäfer from the employers’ institute of the German economy (IW), it is not at all clear which problem the government wants to solve with the compromise: “In the end, a lot of money is spent on a purpose that is not clearly defined.” According to Schäfer’s calculations, the BA would need 24 billion euros to send 4.5 million full-time average earners without children on short-time work for three months. The employment agency’s reserve is just under 26 billion euros.
The criticism from business was correspondingly harsh. Employer President Ingo Kramer praised coalition decisions such as help for restaurants and the easier return of losses for companies. But they would be overlaid by “spending money with a watering can”.
The employers’ association Gesamtmetall criticized that the decisions on short-time work were expensive and caused an enormous additional administrative effort at the BA: “There is great concern that when the economy restarts, the tax and contribution club will fall on the employees and companies,” said CEO Oliver Zander the Handelsblatt. BA boss Scheele said that he would have liked a “simpler regulation”.
Monika Schnitzer, a new member of the Council of Experts, told Handelsblatt that she could understand that the government wanted to expand short-time work benefits. “But I think the chosen way of increasing is problematic.” After all, many employers voluntarily increased to keep their employees. I am afraid that it will have a high share of deadweight effects. ”
Ifo President Clemens Fuest believes the decisions will stabilize consumer demand. They are therefore also “a suitable economic policy measure”. The same applies to the extension of the period of unemployment benefit
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