This is not the time to consider the full reopening of the German economy, but rather the time to be strict and keep coronavirus infections low, Germany’s finance minister told CNBC, adding that richer households will soon pay more in taxes.
“There is no time to open. This is the time to be very tough, to keep infection rates down,” German Finance Minister Olaf Scholz told CNBC’s Annette Weisbach on Tuesday.
Europe’s most powerful economy has suffered from the coronavirus pandemic after being exposed to various waves of infections and subsequent lockdown. In 2020, the German economy fell almost 5% according to data from the International Monetary Fund and is only seen to grow by 3.6% this year.
At the same time, opponents of public health announcements from national and regional leaders have further complicated the situation.
Armin Laschet, head of North Rhine-Westphalia, for example, said on Monday that there should be a nationwide lockdown. But only last week, he had asked for flexibility so that the various heads of state could fight the pandemic that they deem appropriate. Chancellor Angela Merkel also reversed plans for a lockdown over Easter.
“If we could come up with similar initiatives everywhere, this would help a lot and make it more understandable,”
There have been growing demands in Germany for a more comprehensive approach in the fight against coronavirus. Citizens are frustrated by different schemes between different regions, while infections continue to rise.
Merkel herself has called for a tighter and more uniform approach across the country, but regional leaders have so far prevented it.
As of Tuesday, Germany had registered more than 2.9 million deaths in Covid-19 and 77,103, according to data from the European Center for Disease Prevention and Control.
At the same time, there are concerns about the pace of vaccination rollout. Germany has distributed 22.8 doses of Covid-19 shots per. 100 inhabitants from Monday according to ECDC. This is lower than France, Cyprus, Ireland and Hungary – just to name a few examples in the wider EU.
In addition, German health experts last week decided to suspend the use of the Oxford-AstraZeneca shot for people under the age of 60 due to renewed concern over reports of blood clots. This could be another obstacle in the wider rollout, as fewer people are now eligible to receive this shot and the number of vaccines available is still relatively limited.
Speaking to CNBC, Scholz seemed confident of the coming weeks and months for Covid vaccinations.
“I think we’ll get to a situation where by the end of this month there will be 4 to 5 million doses a week,” he said.
“I think this will make the necessary progress and that is why we need to be strict now, because if we are strict in reducing infections, it will be easier to have the success of vaccination,” he added.
Scholz, a senior figure in Germany’s Social Democratic Party, had previously said the country needed to do what was necessary to leave the coronavirus-induced crisis.
Germany is expected to borrow more than 240 billion euros ($ 283 billion) this year to support the economy, a problem that more financially conservative lawmakers have disputed. Germany has had a long history of keeping its finances in check after legislating in 2009 that governments could not significantly incur new debt.
The coronavirus pandemic has changed the dynamics around German debt as several experts argue that the government should continue to provide stimulus.
“We will continue to do what is necessary. It is expensive – but doing something 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 tackle all the burdens that come from fighting coronavirus with better growth in the coming years,” Scholz said, adding, “There is, of course, a situation where there is no time for tax cuts for the rich. people or for large companies. “
“There is a need for tax exemption for low- and middle-income people in households, but of course there are those who are very rich, who have very high incomes, and companies could not expect tax cuts,” he said.
Germany is preparing for national elections in late September. Merkel, who has served as chancellor of Europe’s largest economy for 16 years, has said she will not seek a fifth term.
“I am sure there will be a change after the next election. As you know, I am running to become the next Chancellor and my party will lead the next government and the chances are growing,” he said.
German Finance Minister and Chancellor Olaf Scholz.
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