Germany can keep spending to contend With Covid-19 pandemic, says Angela Merkel

Germany will be able to continue to spend “large sums” next year to contend with the economic fallout from the pandemic, Chancellor Angela Merkel said as the country’s parliament prepares to vote on the federal budget next week.

“We were able to deploy large sums in 2020 and we will be able to do so in 2021 because we have managed our finances well in the past years,” Merkel said. She cited Germany’s ability to avoid building up new borrowing and touted its position as the least-indebted country in the Group of Seven.

Merkel defended the debt-funded stimulus measures her government undertook this year, saying that the cost of not acting would have been far higher because companies would have gone bust and millions of jobs would be lost.

“Of course we cannot maintain this level of support forever and it’s also clear that we will have to work off this exceptional debt from 2023,” Merkel said in her weekly podcast. “We already see enormous budgetary challenges for the coming years.”

Merkel suggested those challenges will have to be shouldered by Germany’s different levels of government, saying federal, state and municipal authorities “have to work together constructively to master the pandemic and its consequences as well as we can.”

The chancellor said she hopes that one or more vaccinations will be available soon, but she damped expectations for a quick end to the coronavirus. “This will not be a question of just a few months, let’s be very realistic,” she said.