COVID-19 economic aid saved 140,000 German businesses, study finds

Germany's extensive economic support measures during the COVID-19 pandemic effectively stabilized businesses and employment, a recent study indicates. Researchers from the Center for European Economic Research (ZEW) found that the federal aid programs in 2020 and 2021 prevented the closure of around 140,000 companies and safeguarded approximately 280,000 jobs.

Economist Friedrich Heinemann, who contributed to the study for a Bundestag inquiry into the pandemic's handling, stated that the overall balance sheet of these financial interventions is "favorable." The aid played a crucial role in navigating the economic fallout of the global health crisis.

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The overall balance sheet of the German Corona economic aid programs 'is favorable.'

However, the study also offers recommendations for future crises. Heinemann advises that future aid packages should be more precisely targeted. He also calls for reforms to the short-time work allowance system and suggests refraining from tax benefits for specific sectors.

A key concern highlighted is the potential for state aid to impede necessary structural transformations within the economy. The researchers emphasize the importance of ensuring that such support does not permanently obstruct the economy's adaptation to new challenges and market demands.

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we must pay even more attention to 'ensuring that state aid does not permanently hinder the necessary structural change.'