Translation

CHANCELLOR MERKEL: Good evening, ladies and gentlemen. We have discussed matters in detail in the coalition committee and have, we think, a good outcome. As you know, we are facing the challenges posed by a pandemic triggered by the coronavirus. It is also one of the greatest challenges that our healthcare system has faced. Our actions to fight this pandemic have led to egregious restrictions being placed on our fundamental rights. We also have to overcome the most serious economic crisis in the history of the Federal Republic of Germany. This crisis can be seen this very day in the shape of the over seven million workers who have been put on reduced hours. They are an indication of the state of the economy. It is clear that the whole situation requires a bold response that will save jobs and keep the economy going, or get it up and running again. That is the dimension assumed by the economic stimulus package we have launched.

At the same time, we live in a period of profound upheaval, marked by the challenges of climate change and the impact of the digital transformation in all areas of life and work. That means that we cannot simply adopt a stimulus package that seeks to preserve the status quo. We need a package that is designed for the future. That is why we have made the future a key priority. The package is worth 130 billion euro for the years 2020 and 2021, of which 120 billion euro will be spent at federal level.

And so we have an economic stimulus package, a programme for the future. Of course our responsibility for Europe and the international dimension also have to be taken into account – although these were lesser considerations here.

We have adopted a broad programme. I will pick out just a few measures.

To revitalise the economy in general, we have decided to reduce VAT for six months, from 1 July to 31 December. Standard VAT will be reduced from 19 to 16 percent and the lower rate from 7 to 5 percent. This is designed to encourage consumer spending. The measure is socially just, because everybody pays VAT. We thus hope that it will have a broad impact and help revitalise the economy as a whole.

Our second priority was to provide certainty for employees and businesses. That is why we have pledged not to let social insurance contributions exceed 40%. This is a guarantee with respect to the social insurance system. It means that we will not cut social security benefits. And we will not allow contributions to exceed 40%.

For reasons of predictability and certainty we will likewise cap electricity costs, so that the surcharge under the Renewable Energy Sources Act, which is bound to rise dramatically due to the pandemic, is fixed at 6.5 cents for 2021 and 6 cents for 2022.

There will be many other measures to help reboot the economy. We will also adopt a bridging programme for small and medium-sized enterprises, using funds that are still available. We will take steps to help the cultural and social sectors, and many others. We also want to revitalise and liberate the economy by streamlining bureaucratic processes – in procurement law, competition law and planning law.

Another key point for us was – thirdly – strengthening local authorities. The federation will pay a greater share of the costs of accommodating people on benefits. This will make a big difference, particularly for local authorities with fewer financial resources and a large number of Hartz IV recipients. We will make up half of the lost revenue from trade tax – another major point – for the years 2020 and 2021.

We will also provide support to cover lost income from local public transport networks, to mention just one more point. You will be given the document in full afterwards.

Fourthly, we want to help families and young people. A prime measure in this regard is the payment of a child allowance bonus of 300 euro for every child. We want to do something to make sure that trainees can find apprenticeships this year. Our goal is to ensure that every young person who wants to learn a trade will have the opportunity to do so. We will, once again, accelerate the provision of all-day child care at school and will push ahead with the expansion of kindergarten provision.

Another central feature is – fifthly – the programme for the future worth a total of 50 billion euro. The idea of this is to foster innovation, in particular with regard to the two challenges I mentioned earlier, climate change and digitisation. A key tool here is the tax allowance for research, which will be improved. A focus here is on modern mobility, in other words support for electric cars, improving the charging infrastructure for electric vehicles and a programme for the sale of commercial vehicles, as well as mobility in general, from the railways to shipping and modern aircraft.

We agreed on the main points of our hydrogen strategy. That took a lot of negotiation. But now we have it, as well as agreement on the further expansion of renewable energies.

We will help local authorities implement the Online Access Act. In other words we will push ahead with the digital transformation of our public services.

We will – and this is something that was very important to me personally – strengthen the local public healthcare sector for the next five years, so that this key sector, which is currently working so hard, is properly equipped for the future. This is a lesson learned from the crisis.

We will also adopt new focuses on specific issues in fields such as quantum computing and artificial intelligence.

All in all, our discussions today were long and hard. Of course we had to accommodate various differing ideas. I think we have risen to the challenge, and we can now say to everybody in the country, businesspeople, employees, parents, council decision-makers alike, that we are trying to come out of this extremely difficult situation together and strong. I think we have laid a solid foundation for this today.