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‘We have finances well under control’: Germany takes on less debt than expected in 2020

Germany took on record new debt in 2020 to shield the economy from the coronavirus pandemic, but less than expected, official data showed Tuesday.

'We have finances well under control': Germany takes on less debt than expected in 2020
Did Germany save more than it thought it would? Photo: DPA

“Despite the pandemic, we have the finances well under control,” Finance Minister Olaf Scholz told reporters.

Europe's largest economy took on €130.5 billion in new borrowing last year.

The amount is the highest since German reunification in 1990, but still less than the 218 billion in new debt authorised by parliament to deal with the health crisis.

In part this can be explained by a weaker than expected economic slump, thanks to a strong rebound during the summer, the finance ministry said.

Germany's economy contracted 5.0 percent in 2020, 0.5 percentage points above the government's estimates, and a smaller decline than during the 2009 financial crisis when output shrank by 5.7 percent.

Some public investments, including in Germany's state-owned rail company Deutsche Bahn, were also postponed to 2021.

Further keeping the lid on 2020's debt figure were delayed payments to businesses hit by Covid-19 shutdowns. Technical problems and red tape meant that many companies only saw payments arriving at the beginning of this year.

Scholz has promised to “simplify and extend” the aid.

READ ALSO: 'We'll be struggling well into next year': German borrowing to soar amid pandemic

Famously frugal Germany abandoned its cherished “debt brake” last year to cope with the pandemic fallout.

The constitutionally-enshrined rule forbids the government from taking on new debt of more than 0.35 percent of gross domestic product (GDP) in any one year in normal times.

Chancellor Angela Merkel's government has pledged nearly one trillion euros in aid and stimulus to help German companies and employees, including through massive short-time work schemes.

In total, Berlin plans for €300 billion of new debt between 2020 and 2021.

Germany's debt-to-GDP ratio climbed to 70 percent in 2020, Germany's central bank said in December, breaching a European Union maximum of 60 percent.

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COVID-19

Munich sees sharp rise in Covid cases after Oktoberfest

Since the start of Germany’s Oktoberfest, the incidence of Covid infections in Munich has risen sharply. Though a connection with the festival can’t yet be proven, it seems likely.

Munich sees sharp rise in Covid cases after Oktoberfest

Two weeks after the start of Oktoberfest, the Covid numbers in Munich have more than tripled.

On Sunday, the Robert Koch Institute (RKI) reported an incidence of 768.7 for the city of Munich, though updated figures for the end of the festival are not expected until later in the week. Usually, on weekends and public holidays, there is a delay in reports.

In the entire state of Bavaria, the incidence value on Sunday was 692.5.

According to Munich’s public health officer, Beatrix Zurek, bed occupancy in Munich hospitals has also increased. Two weeks ago, 200 beds in Munich were occupied by Covid patients, whereas there are now around 350.

Though a relationship between the sharp rise in infections with Oktoberfest, which ended on Monday, can’t be proven at the moment, it seems very likely, according to experts. A significant increase in Covid incidences has also been shown at other public festivals – about one and a half weeks after the start. 

READ ALSO: Germany’s famed Oktoberfest opens after two-year pandemic hiatus

After a two-year break due to the pandemic, around 5.7 million visitors came to this year’s Wiesn according to the festival management – around 600,000 fewer than at the last Oktoberfest before the pandemic in 2019, when there were 6.3 million.

Federal Health Minister Karl Lauterbach (SPD) took to Twitter to comment on the rise in incidence in Munich during the Oktoberfest. “This would not have been necessary if self-tests had been taken before admission,” he said.

“Compared to the price of a measure of beer, €2-3 (for tests) wouldn’t have mattered,” he said.

Even before the start of the Wiesn, he had spoken out in favour of people taking voluntary self-tests. Lauterbach stressed that now is the time for special measures against Covid.

“The development shows what will happen if the states wait too long with the mask obligation in indoor areas,” he added.

READ ALSO: KEY POINTS: Germany’s new Covid-19 rules from October

In neighbouring counties, where many Oktoberfest visitors came from, the number of Covid cases has also risen noticeably.  Beatrix Zurek said that it is unclear, however, how much of a role Oktoberfest played in these figures, as people are currently much more active socially overall, with concerts and other events also taking place throughout the state.

Christoph Spinner, an infections specialist at Munich’s Klinikum, has urged people not to be alarmed by the rising numbers.

“We had expected rising incidences here. We knew that there could be a doubling, tripling, even quadrupling,” he said.

He said that this is no cause for concern, as many people have been vaccinated or have also recovered from previous Covid infections, so any new infections are therefore usually mild.

The virologist advises people over 60 or with pre-existing conditions to get a second booster vaccination, but otherwise said people shouldn’t be alarmed by the rising incidences.

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