Package to stimulate consumer demand in Germany

04 / 06 / 2020
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Thanks to gross domestic product set to shrink 6.3 per cent this year Germany is heading for the worst recession in its post-war history, with

The German government has approved a €130bn fiscal stimulus centred on a big cut in value-added tax as it scrambles to mitigate the economic damage of the coronavirus pandemic. From July 1 until the end of 2020, the standard rate of VAT will be reduced from 19 to 16 per cent, and the lower band cut from 7 to 5 per cent — a measure that will cost €20bn. The government also plans a €300 one-off “children’s bonus” expense for every child in the country.

The government also decided on a €25bn package of “bridging aid”, limited to the period from June to August, for hospitality businesses such as hotels, restaurants, bars and clubs that have been particularly hard hit by a coronavirus. In addition, the coalition partners signed off on a €50bn “future package” including measures to boost investment in research, particularly in areas such as artificial intelligence and quantum computing.

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