Merkel Urges Germany to Be ‘Brave’ Amid Lingering Virus Risk

(Bloomberg) --

Chancellor Angela Merkel vowed to strike a balance between protecting public health and reviving the economy as she pointed to the risks still posed by the coronavirus.

As long as there’s no vaccine or treatment, the disease represents a “danger for all of us,” she told lawmakers in the lower house of parliament in Berlin on Wednesday.

“It would be depressing if we had to go back to the restrictions we want to leave behind because we want too much too quickly,” she said. “So let’s be brave and watchful.”

Germany appears to have brought the virus under control relatively quickly and is moving ahead with a gradual easing of the restrictions that disrupted daily life and hammered business activity. Europe’s biggest economy will likely shrink by more than 6% this year, a bigger contraction than during the financial crisis a decade ago, according to government projections.

Merkel, a trained physicist, has won praise for her cautious and scientific approach, but has been under pressure to speed up the country’s return to some semblance of normality. As some regional leaders push for curbs to be rolled back faster, the chancellor has voiced concerns about a resurgence of the virus and established a limit on new infections that would require restrictions to be reinstated locally.

Revival Roadmap

Germany has gradually rolled back restrictions on the economy. Here’s some of the key dates:

  • April 20: small shops, hardware stores and car dealerships allowed to reopen
  • May 4: Partial school reopenings, hairdressers reopen
  • May 6: Merkel announces plans for broad restart, including restaurants, hotels, all retailers; states given leeway to decide on steps to revive trade fairs, tattoo studios and night clubs
  • May 16: Professional soccer allowed to play games at empty stadiums
  • Sept. 1: large events such as concerts and festivals may be allowed

The crisis has prompted Germany to abandon its balanced-budget policy, mobilizing some 1.2 trillion euros ($1.3 billion) to protect the country’s economy, including aid to stricken companies such as Deutsche Lufthansa AG. Talks to bail out the German airline are at an advanced stage.

To shore up the overall economy, Merkel’s administration is discussing a stimulus package that is expected to involve support for the auto industry and other sectors. A plan is expected in early June.

To fund the program, Merkel said she was against a wealth tax as savings should be secure.

The impact of the virus restrictions was underscored by a survey published Friday by the DIHK industry lobby. Among more than 10,000 companies polled, 60% said they are still suffering a drop in demand, four out of five expect lower sales this year and more than a third will be forced to cut investment.

“The coronavirus is an existential crisis for large parts of the economy,” Achim Dercks, a DIHK deputy managing director, said Wednesday in an emailed statement. “We must accept that we still have tough months ahead.”

Merkel said there’s a chance that Germany can have “joy” on both a return to social life and a recovering economy.

©2020 Bloomberg L.P.

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