German businesses left waiting for pandemic payments

Despite financial pledges, half of SMEs deprived of Covid-19 funds for month or more

German economy minister Peter Altmaier: “We agreed to consider modifications and improvements to the criteria to qualify for assistance . . . so that payments are not delayed further.” Photograph: Andreas Mertens

German economy minister Peter Altmaier: “We agreed to consider modifications and improvements to the criteria to qualify for assistance . . . so that payments are not delayed further.” Photograph: Andreas Mertens

 

Germany’s economic minister Peter Altmaier has promised to expedite pandemic payments to cash-strapped businesses, some of which have been waiting since November for compensation.

Ahead of Germany’s second lockdown, Berlin promised businesses a financial “bazooka” to help with last year’s collapse in earnings. But a survey by a leading SME organisation suggests that one in two of its members have waited more than a month for promised payments, a quarter two months and another quarter is still waiting for money – three months on.

During a heated video conference on Tuesday with 40 business groups, Mr Altmaier blamed the delays on last-minute negotiations and software problems. He conceded this was adding stress and uncertainty to businesses already fighting for their survival.

“We agreed to consider modifications and improvements to the criteria to qualify for assistance . . . so that payments are not delayed further,” said Mr Altmaier, announcing that a new payment portal had gone online – months late.

The most recent figures show that Germany has paid out €6.1 billion in emergency pandemic payments since November, up €1 billion in the last seven days.

‘Five minutes to midnight’

After the conference, sectoral representatives said it was “five minutes to midnight” for many of their members. “The despair is growing and that, in turn, is leading, increasingly, to anger,” said Guido Zöllick, president of the German hotel and restaurant association. “Two-thirds of our members are fighting for their survival.”

Germany’s leading tourist association said the industry was losing €1.6 billion a week while the country’s retail association said its members – already rattled over delayed financial aid – were increasingly frustrated by apparently arbitrary lockdown rules.

“Our sector has implemented functioning health plans and shown that shopping is not a hotspot,” said Josef Sanktjohanser, head of Germany’s retail association.

With Germany’s infection rates falling, representatives at Tuesday’s meeting accused the economics minister of “failing to do his homework” by not preparing an opening plan for their sectors.

Non-essential German retail has been closed since mid-December and a planned reopening from March 7th depends on local seven-day incidence rates dropping below 35 over three consecutive days.

But the Merkel administration and regional leaders have yet to present a strategy for reopening restaurants and travel sectors. A regional leader suggested this week that Easter holidays were unrealistic in 2021.

‘Unvarnished’ words

After Tuesday’s meeting, a chastened Mr Altmaier thanked participants for their “unvarnished” words, knowing his job is on the line. A confidante and former chief-of-staff for chancellor Angela Merkel, Mr Altmaier has come under sustained attack in recent weeks from opposition parties and coalition partners.

Joining the chorus of protest on Tuesday were figures inside Dr Merkel’s ruling Christian Democratic Union (CDU), party colleagues of Mr Altmaier.

Carsten Linnemann, head of the CDU’s business wing, said the “poor” pace of pandemic payment payouts was a disaster for companies with limited financial reserves.

“If I effectively impose a ban on certain sectors of the economy, from gastronomy to retail, then I have to take care of compensation, and it has to flow quickly,” he added.

Germany’s economy shrank by 5 per cent in 2020, less severe than the 5.7 per cent in the 2009 financial crisis but still a “dramatic figure”, according to Mr Altmaier. Unofficial forecasts suggest Germany’s economy will grow by 4.4 per cent in 2021.