Merkel vows to bolster public health service in Germany

Bloomberg

Germany will prioritise strengthening its public-health service and hire more workers, Chancellor Angela Merkel said in her weekly podcast.
Under the plan, the federal government will spend $4.7 billion by 2026 to allow for an additional 5,000 public health-care workers and the improvement of the digitalisation of health departments. The so-called ‘pact for the public health service’ was announced in a separate briefing by Health Minister Jens Spahn and Dilek Kalayci, the chairwoman of regional health ministers. The funding should also help make service more attractive, they said.
“Looking back, one can critically say that both in the federal states and in the municipalities, when it came to providing adequate equipment, the health-care departments weren’t very high on the list of priorities,” Kalayci told reporters.
Germany recorded almost 7,000 cases at the peak of the outbreak in late March. Extensive contact tracing and an expansion of testing capacities has since allowed authorities to keep the infection rate under the key threshold of 1.0.
The measures the government took in March to stabilise the economy and stimulate it over the summer are working better than expected, Finance Minister Olaf Scholz told Neue Osnabruecker Zeitung. The economy may be able to return to pre-epidemic levels by the end of next year or early 2022, Scholz said. “There is a lot of evidence that we have the worst behind us and that the economy is gradually improving,” he was quoted by the newspaper as saying.

Germany sees $94 billion in new debt next year
Germany’s federal government is looking at a budget deficit of more than 80 billion euros ($94 billion) next year as it seeks to sustain the recovery from the coronavirus pandemic.
Finance Minister Olaf Scholz, who has yet to comment publicly on any budget figures for next year, floated the initial estimate at a meeting of the governing coalition last week, one of the officials said. A second official indicated that the number may eventually be slightly higher. A finance ministry press officer declined to comment.
Chancellor Angela Merkel’s Christian Democrat-led group, which governs with Scholz’s Social Democrats, has agreed to suspend constitutional restrictions on federal government borrowing for a second year in 2021, paving the way for her administration to maintain fiscal stimulus as the country prepares for a general election due by September.
The government is due to publish a draft 2021 budget this month once it has updated tax revenue forecasts, which Scholz will present in Berlin next Thursday.
In the face of the coronavirus lockdown, Germany abandoned its long-standing balanced budget policy in March and is set to borrow about 218 billion euros this year.
Ralph Brinkhaus, the head of Merkel’s caucus, said expensive programs like job-preserving subsidies are necessary at the moment, but should not be continued “for too long.”
“It’s about finding a balance, and that also goes for the budget,” Brinkhaus said in an interview with ARD television. “We have budgeted well in recent years and it was right to spend the money now in the crisis,” he added. “But it would be wrong to continue spending so much forever.”
Partly thanks to the government’s stimulus program, German activity has staged a strong rebound after collapsing in the second quarter, and companies have turned slightly more optimistic that it will continue to
accelerate into next year.
Including programs to guarantee company liquidity, the government has made more than 1.3 trillion euros available — the most in the European Union by far.
Merkel last week indicated that she favored maintaining as much budgetary flexibility as possible given the uncertainty the country is facing. Some in her party had been pushing for greater fiscal restraint already in 2021.
In her annual summer news conference, the chancellor warned that the coronavirus crisis will get worse before it gets better and that the fallout will test Germany’s finances for months, if not years.
“In retrospect, I’m happy we didn’t succumb to the sweet poison of borrowing in good times,” Merkel said, adding that this had given Germany more resources to fight the crisis now.
Bundesbank President Jens Weidmann said that Germany’s finances can cope with the increase in debt as long as it is temporary. The central bank estimates that public debt as a percentage of gross domestic product will swell towards 75% this year, from around 60%, still well below many of the world’s major economies.
“Fiscal policy should not get used to a lax course, nor should it rely on interest rates remaining so low over the long term,” Weidmann said in an online speech. “Therefore, after the crisis, it is important to reduce the increased debt ratio again.”
Scholz reiterated that Germany should aim to get its finances back to “normal” in 2022 after the “crisis-fighting budgets” for this year and for 2021.
“We will again next year have to take on more debt beyond the usual limits,” Scholz said during a virtual banking conference. “After that, we will try to get back to a normal situation.”
Scholz is the Social Democrats’ chancellor candidate for the national elections due in September next year.