Germany to unveil major stimulus as virus death toll rises throughout Europe

Germany is about to unveil new measures to mitigate the economic impact of the coronavirus, in what analysts are describing as a “game changer” for a country that’s the leader of fiscal prudency.

The fiscal stimulus comes at a time when Italy is tightening its lockdown after the death toll from the coronavirus surpassed 5,000, and Spain decided to extend its emergency state until April 11. Europe has been the epicenter of the coronavirus since mid-March, with more new confirmed cases than anywhere else in the world.

Germany is planning to increase borrowing by as much as 150 billion euros ($160 billion) this year as well as to pass a 156 billion euro ($167 billion) supplementary budget. The government led by Chancellor Angela Merkel is also setting up a 500-billion-euro bailout fund to take stakes in critical industries, according to various media reports.

At a government meeting on Monday, Berlin is expected to halt its debt brake rule – a law that basically prohibits Germany from presenting structural deficits. The Italian government ordered over the weekend the closure of all industrial production and almost all private and public offices. This means that only what the executive considers to be “essential products” will be developed.

Spain is also stepping up its measures in response to the virus. The government is to extend the state of emergency until April 11, as the death toll keeps rising. Spain has the fourth highest number of confirmed coronavirus cases in the world, after China, Italy and the U.S. As of Monday morning, there were 28,768 infections and 1,772 deaths. European finance ministers will discuss their fiscal response to the coronavirus from 2 p.m. London time.

Germany to unveil major stimulus as virus death toll rises throughout Europe, CNBC, Mar 23