Germany Vows to Maintain Record Spending in Face of Virus Hit

(Bloomberg) --

Germany is standing by plans to invest record sums, even as the economic impact of coronavirus risks causing “considerable” disruption to the country’s budget prospects.

“It is important to me that despite the crisis we invest record amounts in the long-term in modern infrastructure, social cohesion and a climate-friendly country,” Finance Minister Olaf Scholz said in a statement Wednesday after presenting the 2021 budget to cabinet. “This strengthens trust and confidence in the current situation.”

The current budget foresees no deficit spending, but Chancellor Angela Merkel’s government is prepared to abandon its long-standing balanced-budget policy to help finance measures to contain the fallout of the coronavirus. A supplemental budget is likely as the extent of the fallout of the virus becomes clearer.

Germany vowed to mobilize 550 billion euros ($606 billion) in financing to protect companies and workers from the impact of the coronavirus pandemic. Scholz reiterated his promise to do whatever is necessary to protect public health and the economy.

He said Germany’s past budget discipline gives the country the strength and the resources to be able to confront the crisis.

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