Germany says emergency Covid-19 aid can’t continue indefinitely

Germany can’t continue compensating businesses for lost sales beyond next month and more targeted measures will be needed instead, according to senior officials in Chancellor Angela Merkel’s government.

Germany has been in partial lockdown since the beginning of November, with restaurants, bars, gyms and cultural venues shut to try to limit the spread of the coronavirus. The restrictions are likely to remain in force into next year, but Economy Minister Peter Altmaier suggested the emergency compensation, which is costing at least 15 billion euros ($18 billion) a month, won’t be extended beyond December.

“We certainly won’t be able to continue with these very broad packages which compensate for lost sales,” Altmaier said Monday in an interview with DLF radio. He noted that the government has extended so-called bridge aid for companies until the end of June, which will help pay for fixed costs such as rent and heating.

“The state is in a position to act now as we made provisions in the good times, but it’s also true that we can’t continue with these policies for years,” he added. “And we won’t have to, as we’re all hoping that the vaccines are rolled out next year.”

Merkel and regional leaders agreed on the latest shutdown measures to try to stem a surge in infections that has taken the total number of cases well beyond 1 million, with more than 16,000 deaths. Cases have almost doubled since the start of November, stretching capacity in intensive care units.

Some officials at the federal level have been arguing that the 16 states should make more of a contribution to funding aid measures, a dispute that bubbled to the surface Monday at a meeting of Merkel’s CDU leadership.

Ralph Brinkhaus, the head of Merkel’s caucus in the lower house of parliament, had a heated exchange on the issue with Volker Bouffier, the premier of the state of Hesse, according to an official familiar with the discussion who asked not to be identified.

Merkel also criticized some state leaders for opening hotels over the Christmas period. The clashes underscore tensions between national policy makers and regional officials about Germany’s strategy in dealing with the virus.

‘New Impetus’

Altmaier said that the current virus trend is “not the one that we would have liked” and that around 85% of districts still have numbers which are “much too high” to allow for effective contact tracing.

Helge Braun, Merkel’s chief of staff, was quoted as saying Monday that support for businesses needs to be more targeted from January and compensating for sales can’t be a long-term strategy.

“The decision for November aid was an ad-hoc measure,” Braun said in an interview with Handelsblatt newspaper. If necessary, the government will provide “new impetus” for the economy next year, he added.

“We will have to see in the summer,” he said. “If we can get through the winter safely, and a vaccine is available for many people in the spring, then that could boost the economy.”