“We should invest in the future”

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Chancellor's government statement “We should invest in the future”

Federal Chancellor Angela Merkel discussed the economic impact of the coronavirus pandemic with the EU Heads of State and Government. “We need an economic stimulus programme in Europe. This is in Germany’s interest too,” she said after the European Council video conference. It will also be important to invest in the future – in climate protection, innovative mobility concepts and digital transformation.

Chancellor Angela Merkel

Chancellor Angela Merkel consulted with EU heads of state and government about the COVID-19 pandemic.

Photo: Bundesregierung/Steins

FEDERAL CHANCELLOR MERKEL: Ladies and gentlemen, as you know the European Council has just met by video conference for the fourth time since the major outbreak of the coronavirus pandemic. As at our last meeting, the focus was very strongly on how we can and want to master the challenges presented by this pandemic by working together.

Before going into the details, I would like to make two preliminary remarks. Firstly, we were very open in our discussions today, but still conducted them in a spirit of cooperation. Of course, we do not yet agree on all issues, but we are acting on the shared understanding that we can only succeed if we tackle the crisis together; the pandemic affects us all. That is the common understanding that underlies our actions.

Secondly, I would like to put this meeting in the overall context. In early March, at our first video conference as it were, the focus was entirely on the medical aspects, on fighting the pandemic. But at the latest since the video conference at the end of March, the spotlight has been on the economic consequences and the question of a joint European response. Back then we asked the finance ministers to prepare wide-reaching relief measures, and then shortly before Easter the Eurogroup agreed on a solidarity package with a volume of over 500 billion euros. That included separate pillars. To recapitulate: The European Investment Bank is to support small and medium-sized companies. The ESM is the available instrument, and can provide rapid support now that it has been adapted to the circumstances of the pandemic. There will also be a new regulation on government-subsidised shortened work-weeks, which will hopefully be adopted soon.

Our goal – as we all jointly stated today – is for everything to be up and running from 1 June. That means that all the pillars have to be erected in May. This will for example require the German Bundestag to be consulted. I think that we will then have a genuinely important set of tools that will enable us to help quickly and effectively.

Today we spent considerable time discussing how to combat the acute economic crisis in the subsequent recovery phase to ensure that the economy returns to health. It became clearly apparent and everyone said that we need an economic stimulus programme or recovery fund for this period. I want to state very clearly that a common response of this kind is also in Germany’s interest, for Germany will only remain strong in the long term if Europe is strong. We are connected with the entire continent through supply and value chains, as we have now seen. If these supply chains are broken, we all experience major difficulties.

Substantial investments will be needed. I have also clearly stated that the aim will not simply be to continue as normal, as things were before the pandemic. The aim will in large part be to invest in the future. That means there is a direct connection with the steps that need to be taken to tackle climate change, to make progress on innovative mobility concepts, and to further the digital transformation. We will also have to ask ourselves what we have learned from this crisis. What must we in Europe be able to do together to increase our strategic autonomy?

We discussed – albeit not always with the same in mind – the question of whether grants or loans are the way forward. How should the measures be financed? One thing we agreed on was that this recovery fund would have to be very closely linked to the next Multiannual Financial Framework for the next seven years. In other words, we will have to invest a lot more at the beginning. But these things do not happen in a vacuum – everything is connected.

For Germany, this of course means that we will have to make bigger contributions to the next budget than were planned when the last negotiations were held. But that is as it should be; that is a good thing. This crisis has caught us all out, but the way in which countries have been affected differs greatly.

The Commission has again been charged with two tasks today. Firstly, working out which economic sectors will be primarily affected and what can be learned from that, also with a view to designing the recovery fund. And secondly with clearly outlining the possible architecture of such a recovery fund and its links to the Multiannual Financial Framework – a task the Commission wants to complete in May.

One final point: we spoke about the Western Balkan Summit, which the Croatian Presidency had hoped to hold in May. We decided that this event should take place as a video conference between the 27 member states, the institutions and the six Western Balkan countries.

That is some small consolation for Croatia. Croatia was in fact very well prepared to host the Presidency and would very much have liked to welcome us all in person. That can’t happen now. But we will go ahead with the video conference.

QUESTION: Chancellor, in view of the heated debate ahead of the Council, could you perhaps tell us where the fronts were drawn? Was it a clash between North and South, if I may over-simplify, or was it donors against recipients? Did Germany have to defend itself against attacks from Italy, Spain and France, for example?

FEDERAL CHANCELLOR MERKEL: No. The atmosphere was very good, as we all were conscious of the need to take unanimous decisions and find joint ways forward. Of course, everyone presented things from their own point of view. But it was a very, very amicable discussion. And before the summit, numerous preparatory conversations had of course also been held. So no, I wouldn’t use such martial terms.

QUESTION: Chancellor, you gave a date and said the first aid package should be in place from 1 June. Where do you see obstacles in Germany – the package has to be approved by the Bundestag – and where do you see potential obstacles in other countries, such as the Netherlands, to this package being in place by 1 June?

And if I might ask a second question ‑ ‑ ‑

FEDERAL CHANCELLOR MERKEL: It would be a new departure if you only asked one.

FOLLOW-UP QUESTION: There’s speculation about the date of your next conference call with the Länder. As far as I recall, it is due to take place on 30 April. There’s speculation that it will only take place at the end of the first week of May because we’ll know more by then about how the current openings have affected the infection rate. Is there any truth to this? Thank you.

FEDERAL CHANCELLOR MERKEL: We made an appointment for 30 April. We will be able to discuss quite a lot then. But we have always said that we will only be able to see the impact of the decisions on opening shops after a fortnight. The first shops opened on Monday. The last ones will open next Monday. Some Länder did something on Wednesday and I believe some did things yesterday. That means we will be able to discuss this matter on 6 May. However, we will also be able to discuss other issues. So for all those reasons, I assume there will be a conference call on 30 April and something the week after that.

We have decided to keep looking at the impact of the relaxation measures, the opening we’re carrying out. We all agree that we can only see this impact after ten to fourteen days. 6 May is a very good date for that.

As regards the other topic, I actually do not see any major obstacles if the Commission now presents the SURE Regulation for short-time work schemes without delay. We constantly inform parliament about the individual steps. That means people know what is happening with the ESM. The work we will need to do on this Regulation involves the guarantee Germany has to give, which will have to be confirmed by the German Bundestag.

QUESTION: Just briefly, after today’s video conference, are Eurobonds no longer on the agenda?

In your speech in the Bundestag today, who did you mean when you said you think things are moving too fast in the Länder? We spoke with several Minister-Presidents who told us that the Chancellor can’t have meant them. – So who did you mean?

CHANCELLOR MERKEL: I was referring to my general impression.

As regards Eurobonds, we can’t have joint debt, as I said in the German Bundestag today. I repeated that word for word in the video conference.

QUESTION: Chancellor, I’d like to go back to your speech this morning. You called once again for international cooperation in the fight against corona. In your opinion, how well or how badly is international cooperation working with our close ally, the United States, whose President has suspended payments to WHO? How concerned are you that the challenge will exceed the current willingness to work together?

CHANCELLOR MERKEL: I think one thing has already been recognised. And it can also be seen in the conference calls we have in the G7, which is currently under US Presidency, or in the G20, that we know this is a disease that affects us all, a pandemic that no one can evade or escape. It affects us all. That’s why there are many good reasons to work together, for example on developing a vaccine, on supplies of ventilators and on medicines. We need each other here.

Views differ on how effective WHO is. The United States of America has been highly critical. I said again this morning that we need the World Health Organization and that where there are weaknesses, we naturally need to analyse them. Like many other people, I have left no doubt about my support for the World Health Organization.

QUESTION: Federal Chancellor, going back to EU finances, allegedly you said in today’s video conference that a trillion would be needed. After a pretty dramatic presentation by Christine Lagarde, you said it would have to be a huge package. Could you just clarify whether this trillion means the 500 billion plus a further 500 billion from the recovery programme or would it be on top of that?

CHANCELLOR MERKEL: I don’t know what you hear about what is said in the conferences. I have often mentioned this trillion in the context of saying that we naturally have to think about how to decide what amount we need for an economic stimulus programme. That’s perfectly obvious. That’s why we also asked the Commission to make proposals on how we evaluate the individual sectors, that is, what impact or damage these sectors face. There’s a lot we don’t know yet. We don’t know how the tourism sector will develop in Europe; we don’t know what the effect will be on car sales after the pandemic improves somewhat. It is very difficult to predict that now. But everyone agreed that we are not now talking about 50 billion. I simply said that I would be pleased if we did not merely specify the amount, but instead calculated and backed up the reasons why we need it. That was the spirit in which we spoke to each other.

Thank you very much and have a nice evening!