IW: New Corona aid too abundant: Altmaier indicates correction

Sunday 29th November 2020

Economic researchers calculate for the federal government that the corona aid for November and December will bring some companies more than they would have earned before the closure. Economics Minister Altmaier admits that the federal government will no longer be so generous in the new year.

According to calculations by the Institute for the German Economy (IW) in Cologne, the November and December aid from the federal government will be ten billion higher than necessary. If the aid continues unchanged, some companies affected by the partial lockdown will now receive more money than if they had opened, said IW tax economist Tobias Hentze. At the same time, however, he added that this by no means applies to all companies. "Of course there are also areas that have high fixed costs – for example cinema operators." Overall, the federal government has calculated more generously than tightly.

Economics minister Peter Altmaier told the "Welt am Sonntag": "Of course, the focus on sales is not one hundred percent fair, but no criterion can ensure absolute fairness in every individual case." The CDU politician also indicated that the sectors affected cannot count on this type of aid beyond December. "This is by no means justified by a new automatic. We will have to think about what to do when we need longer, far-reaching restrictions," he said.

"Orientation towards fixed costs would be better"

Companies affected by the partial lockdown are supported by the federal government with the so-called November and December aid – a total of around 30 billion euros is currently estimated. According to Hentze's estimate, ten billion euros less would have been enough. The main point here are the variable costs, which many companies now do not incur. "They really don't have to be reimbursed," said Hentze.

In contrast, there are fixed costs such as lease and rent that companies would have to pay even when they are closed. "Basically, I would say it would have made sense to focus on fixed costs," said Hentze. However, this is a significantly greater effort. The federal government opted for a quick, inexpensive solution that would not threaten the existence of any company.

Clear criticism comes from the opposition. "We need Corona aid that will also function fairly in the long term and that will handle taxpayers' money responsibly," said Claudia Müller, SME Commissioner for the Greens in the Bundestag, the newspaper. It cannot be that far too much is being received by some and far too little is being received by others, such as the solo self-employed or the retail sector.