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Ifo Institute: Corona aid has achieved its goal

Ifo Institute: Corona aid has achieved its goal

,   and  ASMedia
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Ifo Institute: Corona aid has achieved its goal
Ifo Institute: Corona aid has achieved its goal

COVID-19 Aid: Ifo Institute Declares Most Measures a Success

According to the Ifo Institute for Economic Research, led by Joachim Ragnitz in Dresden, most COVID-19 aid measures in Germany have achieved their intended objectives. These measures primarily included timely, targeted, and limited-duration liquidity aid for companies with business bans and expanded short-time work benefits.

However, not all measures received positive reviews. Critics argued that certain policies, such as VAT rate reductions and loans to struggling companies, were not specifically tied to the COVID-19 crisis. Regardless, these financial aid packages placed a substantial burden on future generations, with the repayment of corona loans scheduled to continue until 2058.

In total, the German federal government issued over 75 billion euros in subsidies to companies facing liquidity challenges, implemented temporary tax cuts, and provided nearly 70 billion euros in loans to businesses.

Further Reading

The Ifo Institute, headed by Joachim Ragnitz, assessed Germany's policy responses to the COVID-19 pandemic, determining that most subsidies demonstrated timeliness, targeting, and effectiveness in preserving businesses. Despite raising concerns over specific aid measures and their potential impacts on future generations, there's little denying the contribution of these subsidies in supporting businesses during challenging times.

(Source: stern.de)

Insights

  • The Ifo Institute highlighted the significance of the "Quick Loan Program" and "Novemberhilfe" scheme, which offered financial assistance to companies facing COVID-19-related challenges.
  • The federal government's stimulus package, comprising a €130 billion allocation, included measures like temporary VAT reductions and family bonus schemes.
  • The complex nature of some aid schemes necessitated applications through tax advisors or auditors to combat potential misuse.
  • The Ifo Institute estimated that the COVID-19 pandemic would result in an estimated 330 billion euros in economic losses over the years 2020 and 2021.
  • The institute predicted a prolonged recovery period for the economy, indicating that while aid measures are necessary, they may not fully address the long-term impact of the pandemic.

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