Germany’s Scholz on Covid crisis, vaccinations and higher taxes

This is not the time to consider the full reopening of the German economy, but rather the time to be strict and keep coronavirus infections low, the German finance minister told CNBC, adding that richer households will soon have more tax is going to be paid.

“There is no time to open up. This is the time to be very difficult to keep infection rates low,” German Finance Minister Olaf Scholz told Annette Weisbach, CNBC, on Tuesday.

Europe’s most powerful economy suffered from the coronavirus pandemic because it experienced several waves of infections and subsequent closures. According to data from the International Monetary Fund, the German economy shrank by almost 5% in 2020 and will grow by only 3.6% this year.

At the same time, conflicting messages about public health from national and regional leaders further complicated the situation.

Armin Laschet, leader of North Rhine-Westphalia, for example, said on Monday that a nationwide exclusion should take place. But only last week did he ask for flexibility so that the various state leaders could fight the pandemic as they see fit. Chancellor Angela Merkel also reversed plans for a closure over Easter.

“If we could come up with similar measures in all the places, it would help a lot and make it more understandable,” Scholz said, referring to the different regional approaches.

There has been a growing demand in Germany for a more unified approach to the fight against the coronavirus. Residents are frustrated with different arrangements in different regions, while infections continue to increase.

Merkel herself has called for a stricter and more uniform approach across the country, but regional leaders have so far prevented it.

As of Tuesday, Germany had registered more than 2.9 million deaths in Covid-19 and 77,103, according to data from the European Center for Disease Prevention and Control.

At the same time, there are concerns about the rate of vaccination. According to the ECDC, as of Monday, Germany had distributed 22.8 doses of Covid-19 shots per 100 inhabitants. It is lower than France, Cyprus, Ireland and Hungary – to name just a few examples in the wider EU.

In addition, German health experts last week decided to suspend the use of the Oxford-AstraZeneca shot for people under 60 due to renewed concerns over reports of blood clots. This could become another obstacle in the wider implementation, as fewer people are now eligible to receive this shot and the number of available vaccines is still relatively limited.

In conversation with CNBC, Scholz looked confident over the coming weeks and months for Covid vaccinations.

“I think we’ll get into a situation where it’s going to be 4 to 5 million doses a week by the end of this month,” he said.

“I think it will make the necessary progress and that is why we need to be strict now, because if we are strict in reducing the infections, it will be easier to achieve the success of vaccination,” he added.

Scholz, a high-ranking figure of the German Social Democratic Party, said earlier that the country must do everything necessary to leave the coronavirus-induced crisis.

Germany is expected to borrow more than 240 billion euros ($ 283 billion) this year to boost the economy, an issue that more fiscally conservative lawmakers have disputed. Germany has a long history of keeping its finances in check, after enacting legislation in 2009 that governments could not incur significant new debt.

The coronavirus pandemic has changed the dynamics surrounding German debt as more experts claim the government continues to stir up.

“We will continue to do what is necessary. It is expensive – but doing nothing can lead to even higher costs,” Scholz told reporters late last month.

But with more loans, there will be more taxes.

Germany “has the chance to tackle all the burdens resulting from the fight against the coronavirus with better growth in the next year,” Scholz said before adding: for the rich are not people or for big business. ‘

“Tax relief is needed for people with low and middle incomes in households, but those who are very rich, with very high incomes and companies cannot expect tax cuts,” he said.

Germany prepares for national elections at the end of September. Merkel, who has served as chancellor of Europe’s largest economy for 16 years, said she would not seek a fifth term.

“I am sure there will be a change after the next election. As you know, I am becoming the next chancellor, and my party wants to lead the next government and the chances are greater,” he said.