Half of the costs variable: Corona aid more worthwhile than opening up?

Sunday 29th November 2020

With the November and December aid, the government is supporting businesses affected by the lockdown measures, such as restaurants or cultural institutions. For many, this is even more rewarding than if they had opened, the Institute of German Economy calculates.

According to a calculation by the Institut der Deutschen Wirtschaft (IW), the federal government pays ten billion euros more than actually necessary for the November and December aid. According to the calculation, the affected businesses – especially from the catering and event industry – earned more money in many cases than if they had opened thanks to the compensation from the state, reported the "Welt am Sonntag".

With reference to figures from the Bundesbank, the institute assumes that on average half of the costs in the sectors concerned are variable – that is, they do not even arise when the companies are closed. Nevertheless, the federal government pays the companies 75 percent of sales from the same month of 2019.

Although there are differences between the individual industries, the newspaper quoted from the IW calculations. Across all those affected, however, around every third euro of the around 30 billion euros estimated by the federal government for November and December is being paid too much.

Help until the end of the editions

Federal Justice Minister Christine Lambrecht believes that state compensation payments to the economy are legally required until the drastic Corona requirements are lifted. "We all assume that we will have a vaccine as soon as possible. As long as we experience such serious restrictions, however, as long as there must be help in my opinion," said the SPD politician of "Welt am Sonntag". "This reduces the severity of the interventions and thus also contributes to the proportionality of the measures."

Lambrecht admitted, however, that the federal government's financial possibilities are not limitless. "Fighting the pandemic is a national task that has to be tackled jointly by the federal and state governments," said the SPD politician. Lambrecht stood on the side of Union parliamentary group leader Ralph Brinkhaus, who had also called for financial participation from the federal states.