Over 1,100 companies apply for state aid

Though Opel and Arcandor have dominated the headlines, over 1,100 German companies have asked the government for help weathering the current financial crisis, the Frankfurter Allgemeine Zeitung reported Sunday.

Over 1,100 companies apply for state aid
Photo: DPA

Without citing sources, the newspaper reported 345 companies’ applications had been approved, totaling €640 million worth of loans which have flowed through the state-owned KfW bank. If all of the applications are approved, the government could have to finance up to €5 billion worth of loans, according to the FAZ.

Most of the 1,100 applications come from small and medium-sized companies. In addition, there are at least 20 applications from large companies for loan guarantees of approximately €7 billion. Examples include the car maker Porsche and tire maker Schaeffler, both of which are struggling to repay massive debts the two companies accumulated trying to buy rival firms.

The newspaper says the costs to rescue automaker Opel are not included in the estimates.

The cost estimates also only include expenditures by the federal government, though state governments have also intervened. The state of Hesse, for example, has offered loan guarantees since November 1.

“When politics mixes itself into the allocation of money, then the dam quickly breaks,” said Kurt Lauk, the president of the Christian Democrats’ economic council told the newspaper.

As a result of falling tax revenues and greater state spending, state debt is expected to reach a record €1.66 trillion by the end of the year, which will cost an additional €70 billion per year in interest payments alone.

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How Germany is reacting to far-right election victory in Italy

While far-right groups have been celebrating, other politicians in Germany see the results as worrying. Here's a look at the reaction.

How Germany is reacting to far-right election victory in Italy

According to initial projections following Italy’s election on Sunday, the coalition led by Georgia Meloni and her radical right-wing Fratelli d’Italia party has won a majority of seats in the two chambers of the Italian parliament and will lead the next government. 

Meloni is a euro-sceptic who has previously spoken about having an “aversion” to Germany and referred to German Chancellor Olaf Scholz as “socialist” while on the campaign trail.

However, Chancellor Olaf Scholz’s deputy spokesman Wolfgang Buechner told reporters on Monday: “We of course have to wait for the official final result from this election but at this time what the chancellor would say is that Italy is a very Europe-friendly country with very Europe-friendly citizens and we assume that won’t change.” 

READ ALSO: What will a far-right government mean for Italy?

A Finance Ministry spokesperson added that Berlin expected the new Italian government to continue to respect the stability pact that sets the fiscal rules for the eurozone.

Despite these reassurances from the central government, German politicians in the EU parliament have expressed concern about the new direction for Italy.  

Rasmus Andresen, spokesman for the German Greens in the EU Parliament, said the “unprecedented Italian slide to the right” will have massive repercussions for Europe and for the European Union.

“Italy, as a founding member and the third strongest economy in the EU, is heading for an anti-democratic and anti-European government.”

Though Meloni no longer wants Italy to leave the eurozone, she has said that Rome must assert its interests more and has policies that look set to challenge Brussels on everything from public spending rules to mass migration.

The Greens’ co-leader in Brussels, Thomas Waitz, told Die Welt that the EU can only function if it sticks together, for example on cooperation in energy markets, decisions on Russian sanctions or dealing with the Covid crisis. “Meloni, on the other hand, would back national go-it-alones. It can be a disaster for Europe,”  he said. 

READ ALSO: Euro falls to 20-year low against US dollar

The FDP’s expert on Europe, Alexander Graf Lambsdorff, takes a similar view. He said on ARD’s Morgenmagazin that cooperation with Italy in the European Union will become more difficult. He said that it will now be much more difficult to achieve unity in Europe, especially on the issues of migration, reform of the Stability and Growth Pact and the single market.

Speaking on RTL, Green Party leader Omid Nouripour called the election results in Italy “worrying” and pointed out that people within the Italian right-wing nationalist alliance have “very close entanglements with the Kremlin”.

“We can’t rule out the possibility that people in Moscow also popped the corks last night,” he said.

Germany’s own far-right party – Alternative für Deutschland (AfD) – has been celebrating the victory. 

AfD member of the Bundestag Beatrix von Storch wrote “We cheer with Italy!” on Twitter late Sunday evening.

Referring to the recent elections in Sweden, where the right was also successful, von Storch wrote: “Sweden in the north, Italy in the south: left-wing governments are so yesterday.”

Her party colleague Malte Kaufmann tweeted, “A good day for Italy – a good day for Europe.”

With reporting from AFP