Weekly Update from the German Federal Parliament (Bundestag)
News Article: Extended Deadline for Economic Stabilization Fund and Second Supplementary Budget in Germany
The German government has extended the deadline for companies to apply for the Economic Stabilization Fund (WSF) until 30 April 2022, providing a chance for approvals to be made before the WSF expires [1]. This extension comes as part of a Second Supplementary Budget for 2021, which was approved with a focus on emergency fiscal measures to support the economy, boost investments in climate protection, and secure projects in the area of digitization [2].
Originally, there was no application deadline for the Economic Stabilization Fund. However, the extension is intended to ensure more funds can be used, as the deadline for claiming these funds by one year is extended [3]. The funding pots will be reduced, as the available funds are far from exhausted [10].
The Second Supplementary Budget, amounting to 60 billion euros, was initially planned to include a €5 billion climate special fund by Berlin. However, a Federal Constitutional Court ruling in November 2023 limited the use of emergency credit authorizations, impacting the planned climate-related funds [4].
Despite this setback, recent amendments to Germany’s fiscal framework allow the Länder (regional states) to run structural deficits up to 0.35% of GDP and access up to €100 billion in federal infrastructure funding, supporting ongoing investments [4].
The budget also aims to catch up on investments in climate protection that were delayed due to the pandemic. To this end, 750 million euros were made available to the federal states and municipalities in advance for accelerating the expansion of full-day care infrastructure [6]. The federal government has set up a special fund of 3.5 billion euros for full-day care, and starting from 2026, schoolchildren will have a legal right to full-day care, with the legal right gradually expanding to include grades two to four [7].
The Government's Draft Bill, which is being discussed this week, is by SPD, Alliance 90/The Greens, and FDP. It includes a proposal to retain the adjustment procedure for the 20th legislative period and an extension of the deadline for the Economic Stabilization Fund to allow large German companies to continue receiving state funds beyond the end of the year [1][3].
The EU Commission has also extended the temporary framework for state aid until the end of June 2022 [8]. Regularly at the start of a legislative period, the Bundestag must decide on the continuation of the adjustment procedure for Members' allowances [9].
In principle, the funding pots will be reduced, but the extension aims to simplify the use of funds by combining the base and bonus pots [11]. The deadline for the Economic Stabilization Fund has been extended, allowing large German companies to continue receiving state funds beyond the end of the year [1].
[1] German Government Extends Deadline for Economic Stabilization Fund [2] Second Supplementary Budget for 2021 in Germany [3] Extension of Deadline for Economic Stabilization Fund [4] Federal Constitutional Court Ruling Affects Second Supplementary Budget Implementation [5] Germany's Fiscal Framework Allows Länder to Run Structural Deficits [6] 750 Million Euros Made Available for Accelerating Full-Day Care Infrastructure Expansion [7] Full-Day Care for Schoolchildren to Become Legal Right [8] EU Commission Extends Temporary Framework for State Aid [9] Bundestag to Decide on Continuation of Adjustment Procedure for Members' Allowances [10] Funding Pots for Economic Stabilization Fund to be Reduced [11] Extension Aims to Simplify Use of Funds by Combining Base and Bonus Pots
- The extended deadline for the Economic Stabilization Fund in Germany will allow businesses to continue receiving state funds beyond the end of the year, providing a crucial lifeline for companies seeking financial support in the midst of economic instability.
- As part of the Second Supplementary Budget for 2021, the German government has focused on emergency fiscal measures to reinforce the economy, invest in climate protection, and digitization initiatives, demonstrating their commitment to safeguarding the nation's business and financial interests amidst political uncertainties and general news events.
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