Over 1,100 companies apply for state aid
Though Opel and Arcandor have dominated the headlines, over 1,100 German companies have asked the government for help weathering the current financial crisis, the Frankfurter Allgemeine Zeitung reported Sunday.
Without citing sources, the newspaper reported 345 companies’ applications had been approved, totaling €640 million worth of loans which have flowed through the state-owned KfW bank. If all of the applications are approved, the government could have to finance up to €5 billion worth of loans, according to the FAZ.
Most of the 1,100 applications come from small and medium-sized companies. In addition, there are at least 20 applications from large companies for loan guarantees of approximately €7 billion. Examples include the car maker Porsche and tire maker Schaeffler, both of which are struggling to repay massive debts the two companies accumulated trying to buy rival firms.
The newspaper says the costs to rescue automaker Opel are not included in the estimates.
The cost estimates also only include expenditures by the federal government, though state governments have also intervened. The state of Hesse, for example, has offered loan guarantees since November 1.
“When politics mixes itself into the allocation of money, then the dam quickly breaks,” said Kurt Lauk, the president of the Christian Democrats’ economic council told the newspaper.
As a result of falling tax revenues and greater state spending, state debt is expected to reach a record €1.66 trillion by the end of the year, which will cost an additional €70 billion per year in interest payments alone.
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Without citing sources, the newspaper reported 345 companies’ applications had been approved, totaling €640 million worth of loans which have flowed through the state-owned KfW bank. If all of the applications are approved, the government could have to finance up to €5 billion worth of loans, according to the FAZ.
Most of the 1,100 applications come from small and medium-sized companies. In addition, there are at least 20 applications from large companies for loan guarantees of approximately €7 billion. Examples include the car maker Porsche and tire maker Schaeffler, both of which are struggling to repay massive debts the two companies accumulated trying to buy rival firms.
The newspaper says the costs to rescue automaker Opel are not included in the estimates.
The cost estimates also only include expenditures by the federal government, though state governments have also intervened. The state of Hesse, for example, has offered loan guarantees since November 1.
“When politics mixes itself into the allocation of money, then the dam quickly breaks,” said Kurt Lauk, the president of the Christian Democrats’ economic council told the newspaper.
As a result of falling tax revenues and greater state spending, state debt is expected to reach a record €1.66 trillion by the end of the year, which will cost an additional €70 billion per year in interest payments alone.
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