ifo Institute Calls for Economic Assistance in Germany to Be Phased Out at the End of March
The ifo Institute has called for Germany’s economic assistance program to be phased out by the end of March. “If the Conference of Federal State Prime Ministers (MPK) decides to gradually lift the restrictions on the economy – including those in place for the hospitality and event industries – by March 20, then assistance ought also to be withdrawn at that time,” ifo President Clemens Fuest said in Munich on Wednesday. “Special provisions could be made in individual cases of hardship,” he added.
“The MPK wants to lift the restrictions, but extend economic assistance, in the form of the special provisions for short-time allowance and bridging aid for companies, to June 30. These two ideas are at odds. Such an extension has high costs, leads to deadweight losses, and sets the wrong incentives for businesses to stay closed longer than necessary. There is sufficient demand among consumers, especially since a large proportion of the population is vaccinated and concern about infection is thus low. There’s no justification for extending assistance in this situation.”
