The German government has agreed to pump another €10bn into its Covid-hit economy, prolonging a short-time work scheme and freezing insolvency rules.
Short-time work saves jobs by allowing employers to reduce the employees’ hours but keeps them in work. That programme had been due to expire in March 2021 and will now be extended until the end of next year.
Bridging aid for small and mid-sized companies will now be extended until the end of this year too.
The latest €10bn pledge comes on top of a massive stimulus package, worth more than €130bn, which Angela Merkel’s government hope will help the economy return to growth.
The German economy contracted at its steepest rate on record in the second quarter and the government is desperate to mitigate the effects of the pandemic as much as possible, especially in the run-up to elections in the autumn of 2021.
Finance Minister Olaf Scholz, a Social Democrat, told public broadcaster ZDF the measures could cost up to 10 billion euros next year.
“The goal now is to stabilise the economy,” said Scholz. “The fact that we acted fast and big has resulted in Germany weathering the crisis much better than other (countries).”
The parties also agreed to prolong measures aimed at staving off bankruptcies by allowing firms in financial trouble due to the pandemic to delay filing for insolvency until the end of the year.
