Economic slump expected as in the financial crisis

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Economic slump expected as in the financial crisis

Due to the economic consequences of the corona epidemic , the Federal Government expects a significant growth slump and considerable tax reduction.

Federal Finance Minister Olaf Scholz (SPD) expects that the federal government alone will generate around 33 billion euros less this year.

This corresponds to about a tenth of the tax revenue previously estimated for 2020. This emerges from Scholz’s presentation for the cabinet meeting this Monday, which is available to the Tagesspiegel.

Five percent minus?

It says: “In the current situation there is a duration the pandemic and the associated measures cannot be estimated. However, a clear decline in the gross domestic product must be assumed for this year. ”In the absence of available data, it is said, the supplementary budget is based on an updated assessment of the economic development, which is based on the experience of the financial crisis 2008/2009 due to the lack of available current data . “In 2009 the German economy shrank by 5.6 percent. However, it recovered faster than expected in the crisis year at that time.

Expenditures increase by 122 billion euros

Obviously, the government already wants to arm itself as strongly as possible against the expected slump. It is by no means clear whether the credit appropriations and the new budget plans will ultimately have to be exhausted. Conversely, it is also not clear whether they will be enough. The expenditure volume in the supplementary budget will be increased by a good 122 billion euros compared to the previous planning. With the drop in revenue of 33 billion euros, the already known sum of 155 billion euros results, which Scholz must now cover with new debts, should it become apparent in the course of the year that actually that much money is needed. The total budget will grow from 362 billion to 484 billion euros in 2020.

Up to 55 billion for direct corona measures

The 3.5 billion euros that the federal government provides for acute measures in the fight against the virus should flow fairly quickly. For example, for the procurement of additional protective equipment, the development of a vaccine or treatment measures. However, this can only be seen as first aid. In order to be able to replenish substantial sums in the short term, a lump sum of 55 billion euros will be put into the supplementary budget to combat pandemics immediately.

50 billion for small business owners

In addition, there is the support program for small business owners and solo self-employed people, which is now worth up to 50 billion euros will have. The money is to be paid for bridging aids in cases where there is a threat to their existence. 7.67 billion euros are planned for higher payments for unemployment benefit II, the cost of accommodation for the unemployed, basic security in old age and in the case of reduced earning capacity.

Rescue package for larger ones Companies

The rescue package for large companies, which is initially primarily intended to secure liquidity, is also part of the supplementary budget. However, the federal government only provides the Kreditanstalt für Wiederaufbau with a guarantee framework that serves to secure credit for companies (and indirectly for banks). So they are guarantees. The total volume of this guarantee framework will be increased by around 357 billion euros to 822 billion euros.

Emergency rule of the debt brake

In view of the huge new debt, the Bundestag must implement the emergency regulation of the debt brake on Wednesday. In view of the expected economic downturn, the framework for regular borrowing is growing massively from around EUR 12 billion to EUR 50 billion. But for the additional credit appropriations of around 100 billion euros, the expansion of debt must be decided separately.

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