Germany plans €17 billion aid to companies and freelancers for extended shutdown

Germany plans €17 billion aid to companies and freelancers for extended shutdown
A woman walking past a restaurant in Hanover on Monday. Photo: DPA
The German government plans to set aside a massive aid package for firms and self-employed people this December.

It came as negotiations continued ahead of crunch talks between the government and the states.

Under the state premiers' proposals, the partial lockdown across Germany will be extended until December 20th.

A final decision is expected to be taken during the consultations with Chancellor Angela Merkel and the states on Wednesday.

If the partial lockdown is extended, restaurants, bars and cafes as well as leisure and cultural facilities – which have been closed since November 2nd – will remain shut.

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Will there be financial support?

The government has promised support to companies affected by the closures.

So far authorities have earmarked around €14 to €15 billion to compensate for lost turnover in November.

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The support is for affected businesses, such as bars and restaurants or self-employed artists.

Companies with up to 50 employees and self-employed people are to be compensated for 75 percent of the loss of turnover, based on their November 2019 takings. For larger companies, the percentages are determined in accordance with European guidelines on state aid law.

The application process for claimants is expected to begin over the course of this week, and the funds are to be allocated to those affected by the end of the month.

The money is to come from a pot set aside for ongoing 'bridging aid' during the pandemic.

The Pino restaurant in Frankfurt has turned to showcasing pandas instead of customers as part of their 'Pandamie' bears protest on the shutdown. Photo: DPA

It is not yet clear what the new aid for December will look like. According to reports, the December financial aid would be based on the model of the November package, and worth around €17 billion.

However, it's unclear whether a 75 percent loss of turnover will be granted again.

'Reserves have been used up'

The federal government has already taken on huge debts to protect companies and jobs during the coronavirus crisis.

Business representatives say the support is badly needed to keep the economy ticking over. They are also worried about the November aid reaching people.

“Extending the November aid is important in order to give businesses a chance of survival. The reserves have been used up,” said Ingrid Hartges, the chief executive of the hotel and catering industry association Dehoga, on Tuesday.

“We need concrete information, including details of the November aid, when the money will be paid out, because not a cent has been paid out yet. The fact that the closures will now continue until December 20th naturally exacerbates the situation”.

The Federal Association of Small and Medium-sized Enterprises (Bundesverband mittelständische Wirtschaft) called for improvements to the support process.

This mainly concerns companies that are indirectly affected by closures, for example in the catering industry. Federal Managing Director Markus Jerger said that the federal and state governments must finally make a binding declaration on how the aid for ailing companies should be paid out in November and continued in December without red tape.

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