FILE PHOTO: Chancellor Angela Merkel gestures at a press conference on corona virus in Berlin on March 11, 2020. REUTERS / Michele Tantussi
BERLIN (Reuters) – The coronavirus crisis is more of an exceptional situation than the banking crisis, said Chancellor Angela Merkel on Thursday, adding that her government’s focus now is not on how its budget works.
After meeting with the heads of state and government of the 16 German federal states, Merkel said their finance and economics ministers would present a “very comprehensive” package of additional measures to support German companies on Friday.
When asked about Germany’s self-imposed political promise not to take on new debt, Merkel said the budget was not her government’s primary focus, and underlined her message the day before that public finances were secondary.
“The debt brake … provides for exceptions in exceptional situations – and, as I said yesterday, that is really not our issue as to how the budget balance will look in the end,” said Merkel at a press conference.
According to the German debt brake rule, the federal government can take on new debts of up to 0.35% of economic output. France has used the corona virus crisis to demand more public spending in Germany and other countries with tax leeway.
“We are in a situation that is unusual in every way, and I would say, more unusual than at the time of the banking crisis, because we are dealing with a health problem, a health challenge that scientists and medicine have yet to answer. Said Merkel.
“It is therefore our job to firstly save people’s lives as well as possible and secondly to maintain economic activity.”
Merkel said that for regions suffering from a dynamic outbreak of the coronavirus, “the temporary closure of kindergartens and schools, for example by bringing Easter holidays forward, is another option.”
Merkel called on people to avoid social contacts where possible and on federal and state governments not to hold events with fewer than 1,000 participants. Previously, it had called for the cessation of public meetings with more than 1,000 people.
Reporting by Paul Carrel and Andreas Rinke; Edited by Sandra Maler and Lisa Shumaker