{"id":11796,"date":"2020-06-09T13:27:06","date_gmt":"2020-06-09T13:27:06","guid":{"rendered":"https:\/\/blogs.transparent.com\/german\/?p=11796"},"modified":"2020-06-09T13:27:06","modified_gmt":"2020-06-09T13:27:06","slug":"the-german-record-economy-package","status":"publish","type":"post","link":"https:\/\/blogs.transparent.com\/german\/the-german-record-economy-package\/","title":{"rendered":"The German Record Economy Package"},"content":{"rendered":"

Due to Coronavirus measures, the economy has taken a blow – also in Germany. With these historic problems, you also need historic solutions. And Germany did just that: It passed a massive\u00a0Konjunkturpaket\u00a0<\/em>(economy package). Let’s take a look what it looks like!<\/p>\n

Rekordzahlen<\/strong><\/em><\/h2>\n
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Frankfurt am Main, the financial capital of Germany and of the European Union, since the European Central Bank has its seat here (Image by Igor Flek at Unsplash.com)<\/p><\/div>\n

A Rekordzahl <\/em>(record number) of people are in Kurzarbeit\u00a0<\/em>(“short-time work”, essentially people work fewer or no hours) and receive Kurzarbeitergeld <\/em>(“short-time worker money”, a state-financed benefit for people that can no longer work full time due to a bad economic situation for their place of work). While during the entire Finanzkrise <\/em>(financial crisis) of 2008 and 2009, 3.3 million people applied for Kurzarbeitergeld<\/em>, just during these months of the coronavirus, 10.1 million applications came in. It’s a huge amount, and\u00a0it looks like Germany will go through a rough time in the next few years, if not decades.<\/p>\n

And so,\u00a0Rekordzahlen\u00a0<\/em>require a proper response. That’s why this week, the\u00a0Gro\u00dfe Koalition<\/em><\/a> (large coalition) decided on a\u00a0Konjunkturpaket<\/strong> <\/em>to the tune of 120 billion euros. Compared to … it is a real “Wumms”-Paket <\/em>(“wham” package)<\/strong> as Bundesfinanzminister <\/em>(Federal Minister of Finance) Olaf Schulz called it.<\/p>\n

So what does it all consist of?<\/strong><\/h3>\n

Well, the entire Konjunkturpaket <\/i>has 57\u00a0Ma\u00dfnahmen\u00a0<\/em>(measures). Too many to list here, and many quite technical, too. So we’ll have a look at the biggest ones.<\/p>\n

First off, the very big one: A temporary reduction of the\u00a0Mehrwertsteuer <\/em>(Value Added Tax)<\/strong>. Costing about 20 billion euros, the VAT on regular items is reduced from 19 to 16 percent and for low-tax items (certain basic necessities) from 7 to 5 percent from July 1 until December 31, 2020. It is a surprise move that nobody saw coming, but it can be significant for companies, and for Verbraucher <\/em>(consumers), if this lower tax also results in a lower price in stores.<\/p>\n

That’s what the German government hopes to achieve with this, at least.\u00a0A\u00a0St\u00e4rkung der Binnennachfrage\u00a0<\/em>(strengthening of internal demand) as it is written in the\u00a0Konjunkturprogramm<\/em>. Get people to spend more, basically. Several supermarkets have already announced that they will pass these savings on to the\u00a0Verbraucher\u00a0<\/em>completely. We’ll see what will happen!<\/p>\n

A second big\u00a0Ma\u00dfnahme\u00a0<\/em>is a\u00a0one-time 300 euro payment for\u00a0Familien mit Kindern\u00a0<\/em>(families with children).\u00a0<\/strong>This is paid together with the\u00a0Kindergeld\u00a0<\/em>(child allowance), so it only benefits families with children that are eligible for\u00a0Kindergeld\u00a0<\/em>in the first place.<\/p>\n

Furthermore, the\u00a0Kaufpr\u00e4mie\u00a0<\/em><\/strong>(buyer’s premium) for\u00a0Elektroautos\u00a0<\/em>(electric cars) is increased from 3000 to 6000 euros\u00a0<\/strong>for all cars costing up to 40,000 euros. The reduction of the Mehrwertsteuer<\/em> of course makes this even better. The industry wanted this\u00a0Kaufpr\u00e4mie\u00a0<\/em>for combustion engine cars too, but that was not implemented.<\/p>\n

If you would like to learn more about this\u00a0Konjunkturpaket<\/em>, Angela Merkel did an interview with the ARD about this:<\/p>\n