Ifo Institute: Corona aid has achieved its goal

Subsidies - Ifo Institute: Corona aid has achieved its goal

According to the economic research institute Ifo, most of the coronavirus aid has achieved its goal. Joachim Ragnitz, deputy head of the Ifo branch in Dresden, said: "Above all, the liquidity aid for companies with business bans and the extended short-time working rules were appropriate. They were timely, targeted and limited in time."

In contrast, the reduction in the VAT rate and the loans to companies that were already struggling had to be viewed critically. "They were not specifically aimed at companies that were having problems due to coronavirus."

The financing will also place a heavy burden on future generations: the repayment of the corona loans runs until 2058. The federal government had paid out grants of more than 75 billion euros to companies threatened by liquidity. In addition, there were temporary tax cuts - 20 billion euros in VAT alone - and almost 70 billion euros in loans to companies.

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1. The Ifo Institute for Economic Research, led by Joachim Ragnitz in Dresden, has assessed Germany's economic policy responses to the Corona pandemic, finding that most subsidies were timely, targeted, and effective in preserving businesses.
2. Criticizing certain aspects of the economic aid, Ragnitz pointed out that reductions in the VAT rate and loans to struggling companies were not specifically tied to the Coronavirus crisis.
3. As a result of these measures, future generations in Germany will bear the financial burden, with corona loans repayments extending until 2058.
4. In total, the German federal government spent more than 75 billion euros in subsidies for companies threatened by liquidity, along with temporary tax cuts and almost 70 billion euros in loans.
5. The debate on the effectiveness and fairness of these economic policies continues, with ongoing discussions about EU funding for industries and the constitutionality of certain financial aid programs.
6. Despite these concerns, it is undeniable that subsidies have played a crucial role in helping businesses navigate the challenges presented by the Covid-19 pandemic.
7. The health sector, too, has been the recipient of significant financial support during the Corona crisis, acknowledging the interconnectedness of economic policies and public health.

Source: www.stern.de