German Scholz on Covid crisis, vaccinations and higher taxes

Now is not the time to consider the full reopening of the German economy, but rather the time to be tough and keep coronavirus infections low, Germany’s finance minister told CNBC, adding that wealthier households will soon be taxing more. Pay.

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

Europe’s most powerful economy has suffered from the coronavirus pandemic, with several waves of infections and subsequent lockdowns. In 2020, the German economy shrank by almost 5%, according to data from the International Monetary Fund, and is growing by only 3.6% this year.

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

For example, Armin Laschet, leader of North Rhine-Westphalia, said on Monday that there should be a nationwide lockdown. But last week he had asked for flexibility so that the various state leaders could fight the pandemic as they see fit. Chancellor Angela Merkel also reversed plans for an Easter lockdown.

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

In Germany there is an increasing call for a more unified approach in the fight against the corona virus. Citizens are frustrated with different regulations between different regions, while infections continue to increase.

Merkel herself has called for a tighter and unified approach across the country, but regional leaders have so far prevented that.

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

At the same time, there are concerns about the pace of vaccination roll-out. According to the ECDC, Germany has given out 22.8 doses of Covid-19 injections per 100 residents as of Monday. This is lower than in France, Cyprus, Ireland and Hungary – just to name a few examples in the wider EU.

In addition, German health experts decided last week to suspend the use of the Oxford-AstraZeneca injection for people under 60 years of age due to renewed concerns about reports of blood clots. This could become a new hurdle in the wider rollout, as fewer people are now eligible for this injection and the number of vaccines available is still relatively limited.

Speaking to CNBC, Scholz seemed confident about Covid vaccinations in the coming weeks and months.

“I think we will get to a situation where it will be 4-5 million doses per week by the end of this month,” he said.

“I think this will make some progress and that’s why we need to be strict now because if we are strict in reducing the infections, it will be easier to get the success out of vaccination,” he added.

Scholz, a high-ranking figure of the German Social Democratic Party, had previously said the country must do whatever it takes to get out of the crisis caused by the coronavirus.

Germany is expected to borrow more than 240 billion euros ($ 283 billion) this year to support the economy, an issue that more fiscally conservative lawmakers have fought. Germany has a long track record of controlling its finances, having enacted by law in 2009 that governments should not take on significant new debt.

The coronavirus pandemic has changed the dynamics around the German debt as more experts argue that the government should continue to stimulate.

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

But with more borrowing, there will be more taxes.

Germany “will have the opportunity to address all the burdens arising from the fight against the coronavirus with better growth in the coming years,” said Scholz, before adding, “There is clearly a situation where there is no time for tax cuts. for rich people or for big companies.

“There is a need for tax relief for people with low and middle income in households, but it is clear that those who are very wealthy, who have very high incomes and businesses, cannot expect tax cuts,” he said.

Germany is preparing for the national elections at the end of September. Merkel, who has been chancellor of Europe’s largest economy for 16 years, has said she will not be pursuing a fifth term.

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