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Germany economy crisis: Angela Merkel warned strict new rules risk damaging ‘setback’

Coronavirus vaccine: European Union citizens receive their jabs

Analysts from the country’s central bank said the economy had managed to stay afloat since the pandemic began but said it could suffer a “sizeable setback” if measures to tackle Covid-19 are extended again. Berlin has introduced increasingly tight measures, such as closing some schools and shops and restricting movement and gatherings since the autumn as it battles a second wave of infections.

If restrictions on economic activity persist or are tightened, there could be a sizeable setback

Bundesbank

Chancellor Angela Merkel demanded “very fast action” to counter the spread of coronavirus mutations and has brought forward a meeting with regional leaders to tomorrow to discuss even tougher restrictions.

The Bundesbank said the economy should be able to hold its ground in the face of existing curbs but could hit reverse if the measures are extended or tightened.

Its monthly report warned: “If infections failed to ease significantly and current restrictions on economic activity were to persist or even be tightened, there could be a sizeable setback.”

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Health Minister Jens Spahn has already said Germany will not be able to lift all curbs by the beginning of February.

The Bundesbank said the economy likely stagnated but did not shrink in the last three months of 2020 as a rebound in industry and construction made up for a slump in hospitality and retail.

It said: “These encouraging signals about the resilience of the German economy give hope that restrictions on economic activity, extended and tightened at the start of the new year, should not overly delay the recovery.”

The warning comes amid calls for Germany to extend and tighten its lockdown measures to get down infection numbers more quickly.

Stricter requirements for companies to allow staff to work from home, compulsory wearing of heavy-duty protective masks in certain areas, restrictions on public transport and the introduction of curfews are being debated.

Finance Minister Olaf Scholz said: “I consider an extension and precise measures to increase the effectiveness of the existing measures necessary.

“Stricter rules for working from home should be considered to reduce mobility and social contacts.”

The number of confirmed coronavirus cases in Germany rose by 7,141 to 2,040,659, according to today’s data from the Robert Koch Institute (RKI) for infectious diseases.

The country’s reported death toll rose by 214 to 46,633.

New coronavirus infections have been decreasing in recent days and the occupancy of intensive care beds by Covid-19 patients has declined by 10 to 15 percent.

Mr Spahn said limited testing and lower death reports over the weekend may have played a role in the downward trend but warned the numbers were still far too high.

He said: “The infection numbers seem to be decreasing, which is good, but we are still a long way from where we want to be.”

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Foreign Minister Heiko Maas has stoked controversy over privileges for people who have received Covid vaccinations by suggesting they should be allowed to go to restaurants and cinemas sooner.

Other ministers have opposed such special rights, fearing they could cause social inequalities at a time when not everyone has the opportunity to be inoculated.

A justice ministry spokesman said Mr Maas’s proposal was “out of the question” as it is not proven that a vaccination stops people from transmitting the virus too.

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