Germany expected to announce fiscal stimulus as European death toll rises

Germany expected to announce fiscal stimulus as European death toll rises
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Germany is expected to introduce new fiscal stimulus measures to offset economic damage caused by the coronavirus pandemic.

Chancellor Angela Merkel’s government plans to increase borrowing by up to 150 billion euros in 2020 and pass a 156 billion-euro supplementary budget, CNBC reported, as well as establishing a bailout fund for critical industries of about 500 billion euros.

The government is also expected to freeze its debt brake rule, which prohibits the company from presenting structural deficits, according to the outlet.

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“The government measures to limit the outbreak of Covid-19 have put the (German) economy into an induced coma,” Carsten Brzeski, chief economist at ING Germany, told CNBC in an email. “With a fiscal big bang, the government tries its own ‘whatever it takes’ to keep the patient alive.”

Germany has seen 24,873 confirmed cases of the virus and 94 deaths as of Monday, according to CNBC, which cited data from Johns Hopkins University. Merkel herself entered quarantine over the weekend after having contact with her doctor, who has been diagnosed with the virus.

Europe has become the new epicenter of the spread of the coronavirus, particularly Italy, where 5,000 have died amid a countrywide lockdown.

Over the weekend, the government ordered nearly all private and public offices closed, with Prime Minister Giuseppe Conte calling the pandemic “the most difficult crisis that the country has faced since World War II.”

Meanwhile, Spain is expected to extend its state of emergency into the middle of April.