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Leading economists call for more government intervention
The German government must do much more and be more targeted in order to limit the economic impact of the coronavirus epidemic, leading German economists demanded in Berlin on Wednesday. Everything must be done to prevent bankruptcies and layoffs.
It was necessary to help companies avoid liquidity bottlenecks. This could happen, for example, through improved depreciation conditions, the general interest-free deferral of advance and subsequent payments for taxes and generous rules for tax loss carry-back. Because of the positive psychological effects, the authors Peter Bofinger, Sebastian Dullien, Gabriel Felbermayr, Clemens Fuest, Michael Hüther, Jens Südekum and Beatrice Weder di Mauro call for the early abolition of the solo surcharge by July 1st for most taxpayers. This directly increases the disposable income of large parts of the population and increases confidence in the state's ability to act.
The federal government must also accept the softening of the black zero. Peter Bofinger emphasized that the corona epidemic would "become an ever greater economic policy challenge". Psychology plays an important role, so it is important to clarify: "The Federal Government is fully capable of acting." All measures should now be "timely, temporary and targeted", meaning targeted, limited in time and quick.
His colleague Jens Südekum said that the most important thing at the moment is to contain the virus. In addition, you need a targeted mix, not a general stimulus package. "It is better to accept a temporary shock now than a long crisis later." It was therefore necessary to decide centrally on important economic measures.
Clemens Fuest said it was important that politics act quickly now and thus meet negative expectations. Even if economic data had not yet shown any crisis, action must now be taken to mitigate the foreseeable consequences.
