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German firms should expect less generous coronavirus aid from January - state premiers

BERLIN (Reuters) - German companies affected by a decision to extend a partial lockdown to slow the COVID-19 pandemic should expect less generous state aid from January onwards, conservative state premiers said on Thursday.

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Chancellor Angela Merkel and state leaders on Wednesday agreed to extend restrictive measures designed to stem a tide of new coronavirus infections until Jan. 10.

The measures, which had been put in place since Nov. 2 and were due to expire on Dec. 20, include keeping restaurants, bars, hotels, gyms and entertainment venues shut.

Berlin has earmarked 15 billion euros ($18 billion) for November and 17 billion euros for December to compensate affected firms through a scheme which entitles them to claim up to 75% of their monthly sales.

But Saxony’s premier Michael Kretschmer and Bavaria’s leader Markus Soeder both said this scheme would change from January onwards which meant less state aid per individual firm.

The new scheme should help companies to cover fixed costs, but it would not compensate for lost profit or a lack of income for entrepreneurs themselves, Kretschmer told MDR broadcaster.

State support could no longer be as extensive as in November and December because it was simply too costly over a longer period, he added.

Soeder said the federal government was currently working on the details of the new scheme, but it was already clear now that firms should brace themselves for less support.

“The state aid of 75 percent sales compensation is available in November and December. You can’t do that forever. Therefore, from January there will be slightly less, but more broadly designed support for more sectors,” Soeder told RTL/ntv.

German Finance Minister Olaf Scholz said last week that he was planning to almost double the borrowing he had eyed for next year to finance emergency aid for businesses during the second wave of the COVID-19 pandemic.

The parliamentary budget committee on Friday agreed to a debt figure of almost 180 billion euros for 2021, the second largest amount of net new borrowing in the history of post-war Germany.

($1 = 0.8237 euros)

Reporting by Michael Nienaber; editing by Philippa Fletcher

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