Germany can comfortably afford to provide financial aid to businesses affected by coronavirus lockdown restrictions until well into next year, according to a senior lawmaker in Chancellor Angela Merkel’s bloc.
“Of course we can keep going until March, until April,” Carsten Linnemann, a deputy head of Merkel’s CDU/CSU caucus, said Tuesday in an interview with ARD television. “We are a very wealthy country.”
The comments from the conservative politician suggest a willingness to dig deeper into public coffers to protect Europe’s biggest economy from the fallout of the pandemic.
Officials imposed a partial shutdown this month that closed restaurants, gyms and cinemas, while keeping most of the rest of the economy running. With contagion rates still nearly triple a government target, the restrictions are set to be extended until at least December 20.
To ease the impact on businesses forced to close, the government has already made around 15 billion euros ($17.8 billion) available. Finance Minister Olaf Scholz said over the weekend that support will be needed beyond the end of this month.
The government plans to finance pandemic-related spending by raising more than 160 billion euros in new debt next year, compared with the current target of 96.2 billion euros.
The latest restrictions have hurt sentiment among businesses, a monthly survey by the Ifo institute suggested Tuesday.
An expectations gauge fell to 91.5 in November from 94.7 the previous month, a steeper drop than economists forecast. More than 70% of companies in the hospitality sector are worried about failing, with almost 20% wondering if they’ll even get through this month, Ifo said, adding that a sub-index for hotels and hospitality “absolutely nosedived.”
Ifo President Clemens Fuest said that the government’s strategy appears tailored only for the coming weeks and entrepreneurs would prefer a longer-term plan.
“Businesses are more or less resigned to the fact that this uncertainty — these measures coming in and being lifted again — is going to stay for some time,” Fuest said in an interview with Bloomberg Television.
The number of cases in Germany has tripled since the start of October to more than 900,000, and the amount of people with the disease in intensive care is at record levels.
The heads of Germany’s 16 federal states agreed Monday to extend the latest lockdown restrictions, while tightening rules limiting social contact. They will hold talks with Merkel on Wednesday to finalize the measures, which would be rolled over for periods of two weeks if contagion rates remain above the government’s target level.
Merkel has said the seven-day incidence per 100,000 citizens needs to come down to around 50 before restrictions can be loosened. It edged up to 143 on Monday, from 141 the previous day, according to the latest report from Germany’s public health authority.
The regional leaders agreed to restrict the number of people allowed in private gatherings to five from a maximum of two households.
The goal remains to allow Germans to celebrate Christmas with their families. According to the latest proposals, contact restrictions would be loosened for the Dec. 23 to Jan.1 period, with gatherings of up to 10 people from different households allowed and children up to the age of 14 exempted.