Germany plans 22 billion euros in COVID aid for companies in first half of 2021, sources say

FILE PHOTO: German Finance Minister Olaf Scholz speaks during a news conference to present the federal government's 2021 draft budget and its longer-term spending plans, in Berlin, Germany September 23, 2020. REUTERS/Fabrizio Bensch/Pool/File Photo

BERLIN (Reuters) - Germany expects to pay out 22 billion euros ($26 billion) in COVID-19 relief aid from January through June 2021 to companies and self-employed people, people close to the matter said, as the impact of the pandemic extends into next year.

Separately, Germany’s November coronavirus aid package to compensate firms affected by lockdown measures will this month amount to 14 billion euros, they said. Initially, the government had expected to pay out 10 billion euros.

The German government’s council of economic advisers expects the economy to shrink less than initially feared this year thanks to a strong summer, but a second wave of the COVID-19 pandemic is clouding the growth outlook for 2021.

As part of the new round COVID-19 relief measure, companies can get up to 200,000 euros a month to cover fixed costs such as rent, while solo entrepreneurs can get up to 5,000 euros.

Germany has enough fiscal firepower to unleash more rescue and stimulus measures if needed to counter the impact of the pandemic on Europe’s largest economy, Finance Minister Olaf Scholz had said on Thursday.

Germany plans to borrow more than 300 billion euros in total this year and next, but it needs to consider carefully which relief measures make sense, Scholz said.

Brussels-based thinktank Bruegel puts the total amount of outright, non-repayable support Germany has been able to offer companies and citizens at 8.3% of its economic output - not far short of the 9.1% figure in the United States.

($1 = 0.8452 euros)

Writing by Arno Schuetze; Editing by David Holmes