This is not the time to think about fully reopening the German economy, but the time to be strict and keep coronavirus infections low, the German finance minister told CNBC, adding that richer households will soon be paying more taxes .
“There is no time for the opening. This is the time to be very tough and to keep the infection rates low,” Federal Finance Minister Olaf Scholz told CNBC’s Annette Weisbach on Tuesday.
Europe’s most powerful economy has suffered from the coronavirus pandemic after facing various waves of infections and subsequent lockdowns. According to the International Monetary Fund, the German economy contracted by almost 5% in 2020 and will only grow by 3.6% this year.
At the same time, opposing public health messages from national and regional leaders have further complicated the situation.
Armin Laschet, the leader of North Rhine-Westphalia, said on Monday, for example, that there should be a nationwide lockdown. But just last week he asked for flexibility so that the various heads of state could fight the pandemic at their own discretion. Chancellor Angela Merkel has also reversed plans for a lockdown over Easter.
“If we could come to similar measures in all locations, this would help a lot and make it easier to understand,” said Scholz, referring to the various regional approaches.
Covid chaos
In Germany there are increasing calls for a more uniform approach in the fight against the coronavirus. Citizens are frustrated with different regulations in different regions as infections continue to increase.
Merkel herself has asked for a tighter and more uniform approach across the country, but the regional leaders have so far prevented this.
According to the European Center for Disease Prevention and Control, Germany had registered more than 2.9 million cases of Covid-19 and 77,103 deaths on Tuesday.
At the same time, there are concerns about the speed of vaccination. According to the ECDC, Germany distributed 22.8 cans of Covid-19 shots per 100 inhabitants as of Monday. This is less than in France, Cyprus, Ireland and Hungary – to name just a few examples in the EU.
In addition, German health experts decided last week to suspend the use of the Oxford-AstraZeneca shot for anyone under the age of 60 amid renewed concerns over reports of blood clots. This could be another hurdle in the further rollout, as fewer people are now eligible to receive this shot and the number of vaccines available is still relatively limited.
In an interview with CNBC, Scholz was confident about the coming weeks and months for Covid vaccinations.
“I think we’re going to get to a situation where it’s going to be 4 to 5 million doses a week by the end of this month,” he said.
“I think this will make the necessary progress and that is why we have to be strict now because if we strictly reduce infections it will be easier to get vaccination success,” he added.
More taxes
Scholz, a high-ranking figure in the Social Democratic Party of Germany, had previously said that the country must do everything possible to overcome the crisis caused by the coronavirus.
Germany is expected to borrow more than 240 billion euros ($ 283 billion) this year to prop up the economy, an issue disputed by more fiscally conservative lawmakers. Germany has a long tradition of keeping its finances in check, following a law in 2009 that prevented governments from incurring any significant new debt.
The coronavirus pandemic has changed the dynamics of German debt as more and more experts argue that the government must continue to provide impetus.
“We will continue to do everything necessary. That is expensive – but not doing anything would lead to even higher costs,” Scholz told reporters late last month.
But with more borrowing, there will be more taxes.
Germany “will have the chance to cope with all the burdens caused by the fight against the coronavirus in the next few years with better growth,” said Scholz and added: “There is obviously a situation in which there is no time for tax cuts for rich people or for big corporations. “
“There is a need for tax breaks for low and middle income households in households, but obviously those who are very rich, have very high incomes and are businesses cannot expect tax cuts,” he said.
Germany is preparing for national elections at the end of September. Merkel, who has been Chancellor of Europe’s largest economy for 16 years, has announced that she will not seek a fifth term in office.
“I am sure there will be a change after the next election. As you know, I will be the next Chancellor and my party wants to lead the next government and the odds are better,” he said.
Federal Minister of Finance and Vice Chancellor Olaf Scholz.
HANNIBAL HANSCHKE | AFP | Getty Images
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