Economy & Politics

Why the Corona aid hardly reaches many of those affected

The Christmas market in Essen has already been partially set up, then stopped for the lockdown in November and temporarily canceledimago images / Jochen Tack

On paper it sounds good, even too good: If a company has to shut down as part of the so-called “November lockdown”, the state reimburses 75 percent of sales. Many entrepreneurs could make a good cut there. Because in many small companies the fixed costs, i.e. the expenses that arise like rent and lease even without business operations, are less than the federal government is now willing to pay. I.

A total of ten billion euros could be paid out by the federal government for the months of November and December too much because of this regulation, calculated the Institute of the German Economy. However, it is unlikely that this will happen. The damage is likely to be much greater if the company is left with because the aid barely reaches them or not at all – as with the previous aid packages.

There are still no concrete figures on the so-called November aid. It has only been possible to apply for them for a few days – almost a month after the factories concerned closed. However, many entrepreneurs already know that they will not be reimbursed for anything or only a fraction of their losses. Because in specific individual cases the initially generous conditions of the assistance become insurmountable hurdles.

There are, for example, the hoteliers who, after the long compulsory break in the spring for November and December of this year, had excellent booking figures and thus the hope that they could at least limit their losses for the year as a whole. In addition, many tourist hotels canceled their traditional company holidays in November, the weakest month in many German holiday areas, for this year.

They had already closed more than enough to carry out the usual renovations and the like. However, since they had little or no turnover in November last year, they do not qualify for the November aid. Because the previous month is used as the basis for calculating the sales to be reimbursed.

Previous bridging aids hardly used

And then there are the many retailers who are losing customers due to the closed accommodation establishments in the holiday regions or the failing Christmas markets. Companies indirectly affected by the ordered closure of the catering industry are also entitled to apply for November aid.

However, only those who can prove that they achieve at least 80 percent of their turnover with “companies affected by the closure order”. The Treasury Department cites a laundry that works for the closed hotels as an example. All dry cleaners that wash only 25 percent of other textiles, for example, are just as empty as the retailers who do their business with tourists, but not directly with the closed hotels.

Since the beginning of the pandemic, there have been numerous attempts, some of them criminal, to enrich themselves with government aid. The bigger problem, however, is that a large part of the billions do not reach those affected. That was the case with the previous relief measures. Of the planned 25 billion euros for bridging aid I for the period from May to August, only slightly more than five percent was paid out.

Bridging aid II, which runs until the end of the year, has so far been used much less. Due to the bureaucratic hurdles, the volume of November aid is likely to end up being significantly lower than the billions promised.

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