Following two days of top-level discussions, Germany’s government unveiled its €130bn support package, making it the largest cash injection ever in the country’s history. The funds will be released over the course of this year and next. Finance minister Olaf Scholz said the agreement between the coalition members demonstrated that Germany had the necessary courage to get itself out of the crisis. Not only is the government prepared to pump billions into the economy, but it will also reduce VAT rates beginning in July, which will result in €20bn less in tax revenues. On top of this, families will receive €300 for each child, suggesting that the government is hoping that consumers can help spend their way out of recession. It’s also a recognition that the middle class is key to the future of the economy.
There were fears that subsidies and support would be concentrated on key sectors of the economy, and on companies with the power to demand support from the government. In particular, it was widely expected that the automobile industry would convince ministers to reinstate subsidies for new cars in order to spark demand. Instead, the government will contribute €6,000 towards the purchase of electric vehicles, making good on its pledge to use the crisis to take steps to create a greener economy.
