Federal Government adopts economic policy shock absorber

Supporting the economy Federal Government adopts economic policy shock absorber

For many businesses, financial conditions are currently marked by uncertainty. A package of measures is aimed at supporting businesses in Germany that find themselves in difficulty due to the war in Ukraine.

The image shows Christian Lindner and Robert Habeck during a press conference. They are standing at lecterns.

Ministers Lindner and Habeck have set in motion a package of support for businesses that have been hit particularly hard.

Photo: picture alliance/photothek

Federal Minister for Economic Affairs and Climate Action Robert Habeck and Federal Finance Minister Christian Lindner have announced an interim package of measures for German businesses. It is targeted at companies that have been particularly affected by sanctions or the consequences of the war in Ukraine. The package is intended to mitigate hardships and prevent sudden structural changes. However, according to Federal Finance Minister Lindner, it will not override market forces. When presenting the package, Lindner also stressed that the package is mindful of the need to use taxpayers’ money responsibly.

Minister for Economic Affairs Habeck added that this was a targeted and comprehensive package that was designed to prevent creating undesirable incentives. However, he also stressed that comprehensive did not mean that every shock could be prevented.

The main components of the package of measures are liquidity assistance and complementary precautionary measures.

Liquidity assistance:

  • A KfW loan programme to ensure that companies have sufficient liquidity in the short term.
  • Continuing individual measures that were put in place during the coronavirus pandemic to expand the Federation-Länder guarantee programmes. These are the guarantee banks and the large-scale guarantee programme.

Additional precautionary measures:

  • Temporary and tightly limited subsidies to provide short-term mitigation for the effects of the increased prices of gas and electricity.
  • A funding programme for businesses that have been put at risk due to high margining.
  • Targeted equity and hybrid capital support.

The precise form of the package of measures will be decided very soon in close collaboration between the two ministries. You can read the joint press release (in german language)  here.