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23 March 2020 By Liam Proud Follow @liamwardproud

Finance Minister Olaf Scholz unveiled a 756 bln euro plan to defend Europe’s biggest economy from Covid-19. That’s bigger as a proportion of GDP than those announced by European peers but he waited too long to act. His silence on joint euro zone bonds is also disappointing.

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UK adds fiscal steel to economy’s virus defences

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German Finance Minister Olaf Scholz on March 23 said his country would borrow an extra 156 billion euros to help fund a fightback against the coronavirus and limit the economic damage caused by the pandemic.

The federal government will provide about 50 billion euros in emergency aid to small businesses, self-employed people and freelancers. Another 3.5 billion euros will be spent on protective health kit, the development of a vaccine and other related measures. The government is also making 55 billion euros available to react “flexibly” and at short notice to the pandemic.

Scholz is separately setting up a 600 billion euro economic stabilisation fund. It will comprise 400 billion euros of guarantees for the corporate debt of firms hit by lockdowns, 100 billion euros for a fund that can take direct equity stakes in companies, and another 100 billion euros in credit to public-sector development bank KfW for loans to struggling businesses.

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