Germany’s coalition parties on Thursday agreed to further measures worth some 10 billion euros ($10.81bn) to shield workers and companies from the effects of the coronavirus pandemic.
The aid package includes more government wage support for people in short-time work schemes, an arrangement that subsidises wages so that firms can cut working hours rather than sack employees, according to a document agreed by senior members of Chancellor Angela Merkel’s ruling coalition.
The parties also agreed to temporarily lower the tax burden for the catering industry through a reduced VAT rate of 7 percent for food and to give some tax relief for small companies.
The package also envisages increased financial support of the federal government worth 500 million euros ($540.88bn) for schools and pupils to boost e-learning and digitalisation.
“Germany has successfully slowed down the COVID-19 pandemic through drastic restrictions. This has significant economic and social consequences,” the coalition parties said in a joint statement issued after more than seven hours of negotiations.
“Nevertheless, we can only loosen the restrictions in small steps, because the virus is still widespread in Germany and we must not jeopardise success by another exponential wave of infections,” the parties said.
Although Germany’s infection rate had slowed a week ago and the country slowly began to reopen its economy, the number of confirmed coronavirus cases increased by 2,237 to 145,694 on Wednesday. This marked a second consecutive day of new infections accelerating, data from the Robert Koch Institute for infectious diseases showed.
The latest stimulus package will allow the government to keep financial means for future measures, the parties said, suggesting that the government wants to keep some of its fiscal powder dry in the event of another escalation in the outbreak.
Germany has already approved an initial rescue package worth more than 750 billion euros ($811.31bn) to mitigate the effect of the coronavirus outbreak, with the government taking on new debt for the first time since 2013.
The first package agreed in March comprises a debt-financed supplementary budget of 156 billion euros ($168bn) and a stabilisation fund worth 600 billion euros for loans to struggling businesses and direct stakes in companies.