Policy Article

Kiel Subsidy Report: Germany’s federal financial assistance in times of corona crisis

Kieler Beiträge zur Wirtschaftspolitik, 37 Download PDF

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The present Kiel subsidy report focuses on the analysis of federal financial assistance in 2021 and the extent to which expenditures in 2020 and 2021 related to the Corona pandemic are subsidies. The authors show that since 2014, federal financial assistance has been on an expansionary trajectory. Including grants from the Future Package, they are expected to rise to an all-time high of 87.2 billion euros in 2021. This means additional spending of EUR 30 billion, or an increase of 52.4 percent compared with the actual figure of EUR 57.2 billion in 2019. At the same time, the federal government's financial assistance is highly concentrated: The five most weighty items account for 51 percent of the financial aid volume in 2021, while the ten most weighty items account for 62.8 percent. The authors observe a particularly strong increase of 36.5 percent in cross-industry aid, for which is explained by the increase in environmental subsidies as part of the federal government's Future Package. Spending under the Future Package, which was launched in the wake of the Corona crisis to stimulate the German economy, is mostly in the nature of a subsidy, unlike federal spending directly related to the pandemic. Financial assistance from this package totals EUR 2.2 billion in 2020 and EUR 18.9 billion in 2021.