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EUR 130 billion would be aimed at stimulating economic recovery. Here is the plan of fiscal measures in detail:
- The VAT reduction from 19% to 16% from July 1 till the end of the year.
- A one-time payment of EUR 300 for each child in the family.
- Support and motivation for the purchase of electric vehicles by the local authorities. However, German car manufacturers were disappointed by the news, as they hoped to see the support schemes implementation that helped the sector during the financial crisis in 2008-2009.
- EUR 25 billion will be given to the hotel and restaurant business to recover. However, this incentive will be valid only until August.
- Reduction of electricity prices by cutting down the tariffs within the Renewable Electricity Act.
The measures announced by the Chancellor of Germany are a supplement to the fiscal measures that were adopted in March. Angela Merkel also noted how fragile the current situation in the economy is, and believes that the planned measures would help to boost consumer demand. Germany's fiscal stimulus is greater than in other western countries, as it amounts to more than 10% of GDP.
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