Recovery: Germany shows the way.

The German government has shed its reputation for excessive monetary caution and announced what the Guardian reveals as a "€130bn boost for [the German] economy."

Highlights include:

• temporary cut in VAT from 19% to 16%
• €300 one-off payment for every child in Germany
• €50bn  to address climate change
• €25bn loan support for small firms
• €10bn for municipalities struggling with lower tax receipts.

The cut in VAT recalls Alistair Darling's cut of the UK's VAT from 17.5% to 15% as part of his package to help us recover form the  2008 financial crash.  The package was successful and the economy was actually growing again when the Labour Party lost office in 2010.  George Osborne's first budget of 2010 knocked the growth on the head by, among other things, raising the VAT to 20%, at which level it remains today

I'm not so sure that helicopter money of €300 per child is the bast way of holding up demand and helping the poorest, but it shows the right spirit.  I would think that increasing all social security benefits, including child allowances for every child and not just  the first two, would be more effective on both counts.  If such increased were universal they could be taxed back from the comfortably off.

Support to address climate change and small businesses are obvious priorities for all developed economies.  I hope the (extra?) €10bn for municipality is money for they can spend on locally determined priorities, rather than on the instructions of their central  government.
Of course, we are not yet aware of the small print  that many or may not surround these measures. but they are certainly moves in the right direction.

Our own government has so far  been  prompt and  generous with emergency survival money, although there are criticisms that much has been advanced without conditions which would have encouraged recipients to adapt to an inevitably different future.  

For example, whey have the airlines been given help with out any requirement  to reduce their carbon footprint, or as suggested in an earlier post, do downsize considerably?  And why aren't firms  with profits destined for tax havens cajoled into keeping them in the UK and paying their share of the civil and physical infrastructures which enable them to make those profits.

We do not yet know what Rishi Sunak's plans are for our long term post-pandemic (and post Brexit?) recovery are, but he would do well to study Germany's lead and the criticism as well as the praise he has received for his prompt survival measures