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German economy minister Altmaier laid out a three-phase-plan for Germany’s economic policy response to the coronavirus hit. Economists at Danske Bank do not expect a pro-active stance from Germany. 

Key quotes

“In the first phase – where we currently are according to the government’s assessment – the state plans to help affected companies with liquidity problems via access to KfW credit and credit guarantees.”

“In a second phase, where the corona crisis worsens beyond some isolated companies and sectors and factory closures become more widespread, the government plans to make more funds available for the aforementioned instruments to a volume of ‘a few billion euros’.”

“Only in a third step, where Germany is faced with a fully-fledged economic crisis of 2008/09 dimensions, has the government signalled its readiness to enact a big stimulus package.”

“We expect Germany’s fiscal response to the corona crisis to stay reactive rather than pro-active, thereby remaining a disappointment to market expectations.”