BERLIN, Aug 21 (NNN-AGENCIES) — Germany will need to take on yet more debt in 2021 to mitigate the impact of the coronavirus on the economy, Finance Minister Olaf Scholz said.
“Next year we will continue to be forced to suspend the debt rule and spend
considerable funds to protect the health of citizens and stabilise the
economy,” Scholz said in an interview with the Funke media group, referring to Germany’s cherished policy of keeping a balanced budget.
Scholz already plans to borrow around 218 billion euros this
year to help pay for a huge rescue package to steer the country through the
coronavirus-induced downturn, blasting through a financial crisis-era “debt
brake” written into the constitution.
The government has pledged over a trillion euros in aid to shield companies
and citizens in Europe’s top economy from the pandemic fallout, including
through loans, grants and subsidised shorter-hours programmes.
Scholz, also the vice chancellor of Germany, said he was expecting the
economy to have recovered from the virus shock and returned to pre-crisis
levels “by the end of next year or the beginning of 2022”.
Germany’s centre-left Social Democrats (SPD) have nominated Scholz to lead them in the race to succeed Angela Merkel as chancellor in next year’s
federal election.
Buoyed by his handling of the coronavirus pandemic, Scholz is now the SPD’s most popular politician, according to national polls.
Europe’s top economy was hit less hard by the coronavirus than its
neighbours, but still saw its GDP fall by 10.1 percent in the second quarter
after a decline of two percent in the first.
Germany’s previous record for a quarterly GDP drop was 4.7 percent in the
first quarter of 2009, after the financial crisis of 2008. — NNN-AGENCIES
