German Chancellor Angela Merkel has confirmed that the German government plans to establish a fund worth 100 billion euros to assist companies in need of financial support, primarily in the form of guarantees, European media report.
The German government will not link the allocated guarantees to conditions similar to those in the aid package for the banking sector introduced last October, Merkel emphasized in an interview with Bild am Sonntag."Our package of measures will contract investments in education and our infrastructure, improve rules for short-term worker benefits to prevent layoffs, and establish a fund to assist financially healthy companies through guarantees if needed," the newspaper quotes Merkel’s statements.
"This will bridge existing difficulties until conditions improve and companies can once again obtain financing from banks in the usual manner." Merkel added that there is no need for 100 billion euros in fresh money for the mentioned fund since it mainly concerns guarantees. Guarantees will generally not include capital injections, the Chancellor stated, but she did not want to rule out the possibility that her government might ultimately take stakes in industrial champions.
"At this current stage, we cannot describe all possible constellations of circumstances," she said. On Monday, leaders of Merkel’s CDU party stated that the government has agreed to take stakes in large industrial companies facing insolvency due to a lack of credit. Although CDU officials did not want to specify which companies they had in mind, government officials pointed to the automotive sector, which is among the most vulnerable to a lack of credit. (H)
