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Berlin, June 2 . .- The great coalition of German Chancellor Angela Merkel seeks to reach a consensus on a post-pandemic economic recovery plan, with a volume of up to 100 billion euros, in the face of a historic recession and shocks in its hitherto strong job market.
The leaderships of the three parties – Merkel’s Christian Democratic Union (CDU), Bavarian Social Christian Union (CSU) and the Social Democratic Party (SPD) – met at noon for an expected long session, according to marathon dating records at the “Groko” – as the grand coalition is nicknamed.
Social Democratic sources indicated that results should not be expected until Wednesday and that everything indicates that the discussions will continue after the Council of Ministers tomorrow, public television reports ARD and ZDF.
In German media it is assumed that the additional budget of 156,000 million euros approved last March, at the start of the pandemic, may not be enough. A new package of somewhat smaller volume is being considered, which would be between 80,000 and 100,000 million euros, according to figures from the ARD, the first national chain.
Germany already gave up with that first additional package to the dogma of the zero deficit that for years marked the Berlin budget line. The question now is where and how to act, in a year in which a contraction of the gross domestic product (GDP) of 6.3% is expected, according to the latest government forecasts.
The partial stoppage of industrial and commercial activity, for weeks, has taken its toll on the labor market: some 7.3 million employees were in May on reduced hours – “Kurzarbeit” -, a formula created to prevent mass layoffs. There are six million more than in the same month in 2009 – the year in which the global crisis caused a contraction of 5.3% of German GDP.
START WITH THE FAMILY OR WITH THE COMPANY
Within the “Groko” there is a division of opinions on what the priorities should be. The SPD of the Minister of Finance, Olaf Schol, wants to put the emphasis on family aid – for which a bonus or additional aid for a child of 300 euros is being considered.
In the conservative bloc of the chancellor, support for the company is stressed, since without it the lost job will not be recovered. It is proposed there from the lowering of the electric bill, to new tax relief possibilities for companies with losses over successive fiscal years.
The 7.5 million people in “Kurzarbeit” correspond to the 750,000 companies that requested this modality last March. At that time there was even a volume of 10 million affected, which ultimately did not happen because the revival of economic life has been relatively rapid.
The impact of the pandemic has been less than in other EU partners and this has favored the progressive relief of restrictions. The number of infections is high -182,028, according to figures from the Robert Koch Institute (RKI), competent in the matter-, but public health has not collapsed, the number of recovered patients is 166,400 and the number of fatalities is moderate -8,522- .
MUNICIPALITIES PUNISHED BY THE FISCAL FALL
Scholz sees it essential to compensate the municipal powers for the drop in tax collection suffered in these months. They have the support of the CDU / CSU, such as the delegation of the “Land” of North Rhine-Westphalia (west), the most populous in Germany and with some of the most indebted municipalities in the country.
The prosperous Bavaria (south), the “Land” most affected by the pandemic and territory dominated by the CSU, is pushing for a car purchase premium to be introduced. Some automotive consortiums such as BMW and Audi are based in that federated state.
The CSU can count on the support of the Social Democrats in Lower Saxony (center), where Wolfsburg is based.
The CDU is at that point somewhere in between. He sees it necessary to support this sector, the exporting prop and traditional engine of the German industry. But he wants to limit support to promoting electric cars and hybrid cars, not fossil fuels and even less diesel engines.