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Germany unleashes biggest post-war aid package against coronavirus

The German government on Friday unleashed the biggest economic aid package in the country's post-war history, offering companies "unlimited" credit to keep them afloat during the coronavirus crisis.

Germany unleashes biggest post-war aid package against coronavirus
Merkel speaking about the new package. Photo: DPA

Chancellor Angela Merkel said the measures “are unprecedented in the  history of the German government”, and repeated that Berlin would do “whatever is necessary” to tackle the fallout from the pandemic.

“There is no upper limit to the credit offered by (state-owned development bank) KfW, that's the most important message,” said Finance Minister Olaf Scholz.

The guarantees, the equivalent of $614 billion, were just “for starters”, said Economy Minister Peter Altmaier.

“We promised that we will not fail because of a lack of money and political will. This means that no healthy company, no job should find themselves in trouble,” he said.

“We will reload our weapons if necessary,” added Altmaier.

The ministers also signalled that Berlin has enough funds in its treasury for a long battle.

“If it lasts longer, we can go on longer,” said Scholz.

The message to companies is that: “You can be courageous, the risks will be carried by us,” he said.

The package, even in its first stage, is bigger than the 500 billion-euro help offered by the German government during the 2008 financial crisis.

READ ALSO: German industry fears 'longest recession' since reunification

Chancellor Angela Merkel had on Wednesday vowed to do what it takes to tame the coronavirus crisis, signalling she was even ready to suspend the cherished dogma of keeping Germany's budget balanced.

“It is an extraordinary situation, we will do what's necessary and luckily Germany is relatively robust… we will do what we can to get through this situation well, and we will see at the end of that where our budget stands,”
she said, stressing that ending the virus crisis “comes first”.

Scholz stressed that, due to having a budget surplus, the state could now do “what is now necessary” to provide security to companies and their workers.

“We show that we are stronger than the problem we face,” he said. The aid programmes through KfW help small, medium-sized and also large companies.

'Whatever it takes'

After six deaths and the number of infections reaching 2,369 in Germany, Merkel on Thursday urged organisers of all non essential events gathering less than 1,000 people to cancel them.

With demand from abroad collapsing, Europe's biggest economy's vital export industries are particularly vulnerable.

With the crisis showing no signs of abating for now, Germany is rushing through new regulations to allow more employees forced into shorter working hours to qualify for compensation.

Merkel's government had also already agreed to boost investments by 3.1 billion euros per year between 2021 and 2024.

The total hike in investments totalling €12.4 billion will be entirely funded by 2019's budget surplus, the coalition had announced on Monday after overnight talks.

Deka Bank chief economist Ulrich Kater said Friday's guarantee package is a “whatever it takes from the government”.

“Like how the ECB acted correctly during the eurozone crisis, the government is now doing the same in the coronacrisis,” he noted, saying that the measures to help particularly small and medium-sized companies through the crisis are “absolutely sensible”

“This is just the news that can stop the downward spiral.”

READ ALSO: Merkel calls for social contact to be avoided where possible

 

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COVID-19

Pandemic in Germany unlikely to end this year, says top virologist

High profile German virologist Christian Drosten believes Germany will see a severe spike in Covid infections after summer, and that the pandemic will not become endemic this year.

Pandemic in Germany unlikely to end this year, says top virologist

Drosten previously said that Germany would probably be able to declare the end of the pandemic this year.

But in an interview with Spiegel, Drosten said he had reevaluated his opinion. 

“When the Alpha variant came, it was very surprising for me. When Delta appeared I was sceptical at first, then with Omicron we had to reorient ourselves again. And since January there have already been new Omicron subtypes.

“So I would actually like to correct myself: I no longer believe that by the end of the year we will have the impression that the pandemic is over.”

READ ALSO: End is in sight for pandemic in Germany, says virologist 

Drosten also said that Germany will not see a largely Covid-free summer, which has been the case in previous years, and a further increase in infections in autumn. 

“We are actually already seeing an exponential increase in case numbers again,” Drosten said.

“The BA.5 variant (of Omicron) is simply very transmissible, and people are losing their transmission protection from the last vaccination at the same time.”

In other countries, he said, when the number of cases become high, hospitalisation and death rates also rise again. “Unfortunately, that will also be the case here,” said Drosten, but added: “Overall, however, far fewer people will become seriously ill and die than in 2021.”

Drosten said he expected many more infections from September.

“I hope that the school holidays will dampen the increase in cases somewhat. But from September, I fear we will have very high case numbers,” the head of the virology department at Berlin’s Charité hospital told Spiegel.

READ ALSO: German Health Minister lays out autumn Covid plan

Virologist Christian Drosten at a Covid press conference in 2021.

Virologist Christian Drosten at a Covid press conference in 2021. Photo: picture alliance/dpa | Kay Nietfeld

If the government does not take any action, he predicted there would be a lot of sick leave across all industries. “That will become a real problem,” he said.

Drosten said he did not expect overcrowded intensive care units in Germany.

But the new BA.5 sub-variant, which is becoming dominant in Germany, may affect people more strongly. 

“The wheel is turning more towards disease again,” said Drosten. It is not true that a virus automatically becomes more and more harmless in the course of evolution. “That makes me even more worried about the autumn,” he said.

Drosten recommends wearing masks indoors during the colder months, saying it is “the least painful” measure.

If, in addition, “up to 40 million people could be immunised or given a booster vaccination” before winter, for example by urgently calling for company vaccinations, that would “really make a difference”, Drosten said.

In the long term, he said it’s inevitable that people will become infected with coronavirus.

He said the population immunity due to vaccinations and infections will at some point be so strong that the virus will become less important. “Then we will be in an endemic state,” said Drosten. In the worst case, however, this could take “several more winters”.

However, Drosten warned against people trying to deliberately infect themselves with Covid, saying getting the infection in summer doesn’t mean people will be protected in winter. 

Drosten himself said he has not yet contracted Covid-19.

“So far, I guess I’ve just been lucky,” he said. “I rarely put myself in risky situations, but I’m not overly cautious either.”

‘Pandemic depends on behaviour’

According to the Robert Koch Institute (RKI)’s latest weekly report, more outbreaks are occurring in care homes, and the number of patients in intensive care units is slightly rising as infections go up. 

The institute said there had been a 23 percent increase in the 7-day incidence compared to the previous week. On Friday the 7-day incidence stood at 618.2 infections per 100,000 people. There were 108,190 infections within the latest 24 hour period and 90 deaths. 

“The further course of the pandemic depends not only on the occurrence of new virus variants and the uptake of vaccinations on offer, it also depends to a large extent on the behaviour of the population,” said the RKI.

According to the DIVI intensive care register, the number of Covid-19 patients in ICUs had increased to 810 on Thursday this week, from about 600 at the beginning of the month.

However, that number is still low compared to previous Covid peaks when thousands of people were in intensive care in Germany. 

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