Yahoo Finance What Britain can learn from Germany's economic response to the crisis
Angela Merkel is on the front foot. Another €130bn of stimulus is on the way with a distinctly non-Germanic spending spree from the Chancellor.
Electric cars, beefed up rail links, digital infrastructure, lower taxes. They are all on the cards as she tries to switch economic policy from preservation mode – keeping businesses and jobs intact through the lockdown – into recovery.
"We couldn't just set out a stimulus package that was done in the traditional sense," she said. "It had to be a package of measures that contained a view to the future."
Britain is a few weeks behind. The UK has not eased its lockdown as much as Germany, and a new budget is under consideration for next month.
So what can Boris Johnson and Rishi Sunak learn from Berlin's actions, and those across the rest of the eurozone?
Easing the lockdown
Small shops in Germany began reopening from 20 April, with new social distancing rules in place. It means a significant chunk of the retail sector could get at least some revenues in.
The bulk of non-essential retail in the UK, meanwhile, is still more than a week away from opening the doors.
Schools and leisure venues in Germany gradually followed suit from 4 May, compared to a more hotch-potch setup for British schools and little progress for the leisure sector.
From 6 May state authorities were given greater control to begin opening more shops, restaurants and sport centres, with Germany's border controls easing from the middle of last month.
Controls remain – larger gatherings are allowed subject to social distancing and face masks, and states can reimpose restrictions in a flare up – but the effect has been to begin some economic reopening.
A combination of a smaller initial outbreak, earlier lifting of the lockdown and a well-established short-time working regime mean economists expect Germany to suffer a significantly smaller blow from the pandemic than other big European economies.
Goldman Sachs' trackers show Germany is much closer to returning to normal when it comes to visits to transport hubs, workplaces and shops than the UK. Its economists predicts unemployment will remain at 4pc in Germany over the year as a whole, compared to 9.5pc in France, 12.6pc in Italy and 18.8pc in Spain.
JP Morgan expects German GDP to drop 5.7pc this year, a far smaller tumble than 10.3pc in France, 8.7pc in Italy, 9.3pc in Spain and 9.2pc in the UK.
Britain has learned from the short-time work system, implementing the furlough scheme to save jobs.
But lifting the wider lockdown relies on confidence the pandemic will keep on fading.
Kickstarting the recovery
Germany is trying to reanimate its economy with the stimulus package.
It might be too early for the UK to do the same, as there are still lockdown measures in place.
"It is part of Government policy right across the world, rightly, to suppress economic activity through the lockdown and other measures, so we are not yet in position to say, let's pull out all stops and get the economy growing again," Alistair Darling, the former Chancellor, told MPs.
"Unless and until the Government gets control of the virus and its spread, it is difficult to see how you can pull out the stops to get the economy going again. People will be fearful of going out and there is the risk of a second wave."
However, that does not mean it is wrong to plan for a stimulus package which can accompany the further easing of lockdown when it comes.
Darling proposes a repeat of his policies from the financial crisis: a VAT cut and a car scrappage scheme, which are not dissimilar to the German plans.
Germany's investment in rail and digital links closely matches Conservative manifesto promises for major infrastructure spending. Broadband investment in particular is in demand as more Britons are likely to work from home for some time to come.
Interest rate action
The European Central Bank has dabbled with negative interest rates.
Policymakers at the Bank of England have indicated they are considering following.
Alternative options also exist for officials seeking new ways to try to boost the economy.
Gerard Lyons, a former adviser to Boris Johnson, proposes a nominal GDP target instead of the current inflation mandate.
It would try to target the cash value of the economy's output including 'real' growth and prices.
"This would help protect against higher inflation in an upturn, and guard against weaker demand in a downturn," he says. The Bank should also intervene to effectively peg the UK's longer term debt costs, with a policy of yield curve control akin to that currently used by the Bank of Japan.
