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IfW demands fair compensation for economic corona loads | message

6


By Andreas Kißler

BERLIN (Dow Jones) – The president of the Kiel Institute for the World Economy (IfW), Gabriel Felbermayr, considers the economic burdens from the fight against the corona virus to be unfairly distributed and calls for compensation. While society as a whole benefits from the containment of the virus, the burden of fighting the virus is borne primarily by those companies that are active in a sector that is particularly affected by health requirements – such as tourism or gastronomy. They started over-indebtedly after the crisis, which hampered the recovery.

For this reason, Felbermayr demanded that the fair compensation of the burdens be the yardstick for economic policy in addition to damage limitation. “If there is no burden-sharing, the equity of many companies will be severely attacked, which could prove to be a heavy mortgage for an upswing after the crisis,” warned the IfW boss. The companies particularly affected could also benefit from loan programs, grants and short-time working arrangements if there was no turnover. But this usually increases their indebtedness.

At the same time, they continued to work under a risk that they could not control, as their business was prohibited or restricted by the authorities for the foreseeable future. “If the companies now knew that in the end they would not be left alone on the loads, they could plan more confidently and with greater certainty for the future,” emphasized Felbermayr. “Only then will the liquidity aid that has already been decided on be fully effective.”

Felbermayr and IfW Kiel’s economic chief Stefan Kooths therefore proposed that a load balancing be announced at an early stage. Specifically, the state could pledge to compensate for the loss of income that arose in the industry on average in comparison to the pre-crisis year 2019. Corona help already received would be taken into account. The public sector should only partially guarantee all loans so that private lenders continue to have an incentive for serious credit checks. The debts necessary for the additional payments by the state would have to be paid off in the following years.

Contact the author: andreas.kissler@wsj.com

DJG / ank / apo

(END) Dow Jones Newswires

April 22, 2020 05:16 ET (09:16 GMT)



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