38 billion euros: an aid package of “whatever it takes”
Dr. Tobias Thomas Director
The German government today announced a €38 billion aid package to mitigate the economic consequences of the coronavirus crisis. Tobias Thomas, Director of the economic research institute EcoAustria, comments on this:
"With the 38 billion euros, the federal government has put together a "whatever it takes" aid package. This corresponds to around 10 percent of Austria's annual economic output. In addition to the four billion euros in emergency aid announced so far, nine billion euros are to be made available for loan guarantees and warranties, 15 billion euros in emergency aid for affected sectors and ten billion euros for tax deferrals. The German government has thus once again demonstrated an enormous willingness to act to protect companies and jobs during the coronavirus crisis.
The measures will leave deep marks on the budget. However, these are of secondary importance in the current crisis. The aid package alone will significantly increase the national debt ratio from the current 69%. Depending on further developments over the course of the year, there may also be additional expenditure and tax revenue shortfalls. However, in recent years in particular, Austria has also shown how economic growth and a solid budget policy can consolidate public finances in a relatively short period of time. For example, the public debt ratio recently fell from 78% in 2017 to just under 70% in 2019. Without the coronavirus crisis, Austria would have fallen below the 60 percent mark in terms of public debt by 2023, thereby also meeting the Maastricht criterion for the first time.
After the crisis, the aim will therefore be to return Austria to a stable path for growth, prosperity and employment with an Austria Recovery Program . Tax relief for employees and companies can also be an important driving force for the upswing, as it leads to more purchasing power, investment opportunities and employment. To this end, a reliable roadmap for the Austria Recovery Program should be drawn up as soon as the current course of the crisis makes it possible. This would be an important step towards stabilizing expectations. The aim should be for Austria to be in a better position than before once the crisis has been overcome."
