Germany eyes fiscal plan to counter coronavirus impact -Handelsblatt

* Handelsblatt: Gov’t looking into scenarios, measures

* Economy Ministry announcement due soon

* CDU budget chief against Scholz proposal on debt rules

* Rehberg: “The constitution is not a craft shop”

* German govt has been under pressure to spend more

By Michael Nienaber

BERLIN, Feb 27 (Reuters) – Germany is considering a fiscal stimulus programme should the coronavirus hit the economy hard, Handelsblatt reported on Thursday, as the economy ministry said it would announce plans for dealing with the epidemic later in the day.

Chancellor Angela Merkel has long resisted calls at home and abroad to provide more fiscal stimulus, despite record-low borrowing costs and an economy teetering at the brink of recession.

“We are currently looking into various scenarios and aid measures for the economy,” the business daily cited an official as saying. It said there were different options on the table depending on how the virus developed and a plan should be available in a few days.

A government official told Reuters the government was always looking into various scenarios to be prepared for all options. He declined to comment on the content of the discussed measures.

Germany has reported 27 cases of the virus. Its economy his highly dependent on China, its biggest trading partner.

Most have already been discharged from hospital, but on Wednesday Health Minister Jens Spahn said it was already impossible to trace all chains of infection, and urged regional authorities, hospitals and employers to review their pandemic planning.

Merkel’s conservatives earlier on Thursday dismissed a proposal by centre-left Finance Minister Olaf Scholz to ease strict federal debt limit rules to boost infrastructure spending.

Weekly paper Die Zeit reported on Wednesday that Scholz planned to suspend the country’s debt brake for a short time to allow Berlin to assume some of the obligations of heavily indebted municipalities, freeing up billions of euros for them to increase spending on roads and schools.

Changing the constitutionally enshrined debt brake rules would require approval by a two-thirds majority in parliament.

“The constitution is not a craft shop,” Eckhardt Rehberg, chief budget lawmaker of Merkel’s Christian Democratic Union (CDU), told Deutschlandfunk radio. He said he expected his parliamentary group to block any such proposal.

“The conservatives won’t support this. Scholz is throwing down the gauntlet,” a parliamentary source said.

The debt-brake law limits the federal deficit in any given year to 0.35% of economic output. This would be roughly 7 billion euros in 2020.

A finance ministry spokeswoman on Wednesday said Scholz was working on his proposal and was expected to present his idea in March.

Meanwhile, conservative Economy Minister Peter Altmaier will brief reporters later on Thursday about his plans in respect of the coronavirus, the ministry said.

Scholz is hoping to become the Social Democrats’ (SPD) candidate for chancellor in the 2021 federal election.

His debt brake proposal is supported by the opposition Greens and The Left.

“It must be clear that federal aid must remain an exception and linked to strict conditions of fiscal discipline and stricter local authority supervision,” SPD parliamentary deputy leader Achim Post said.

“We don’t need red lines now, we need a readiness for dialogue and sensible solutions,” Post said. He called on Armin Laschet, a centrist candidate running for the leadership of Merkel’s conservatives, to come up with own ideas to solve the problem.

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