By Andreas Kißler
BERLIN (Dow Jones) – Against the background of the Corona crisis, the Federal Association of German Banks (BdB) has presented five economic policy proposals to “get a better grip on the enormous challenges facing the German economy”. According to the banking association, the proposals include expanding the tax loss carryforward, promoting the European Capital Markets Union, more investment in research and development, a changed funding policy and more room for maneuver for banks in granting loans.
From the point of view of the private banks, the significant recovery in the economy was stalled by the second lockdown, but there was light at the end of the tunnel. “The uncertainties for 2021 are great. But we see good chances that the economic engine will start again next year and the recovery will pick up speed again,” said BdB General Manager Christian Ossig on the occasion of a virtual press conference.
The rapid intervention of politics prevented the worst economic damage from the corona crisis. “But now it is important to set the right economic and political impulses in order to strengthen healthy companies for the future,” emphasized Ossig. One of the biggest challenges of the coming year is therefore to keep an eye on debt.
Because it is also clear that the next few months will be an endurance test for some of the companies. There will be bankruptcies and loan defaults. “The banks have an eye on both – and we can handle it,” he said. You shouldn’t be fooled by the currently historically low bankruptcy figures. “They will increase significantly in the course of 2021,” said Ossig. “We’re not over the mountain yet.” There is no point in continuing to rely on the “watering can principle” for state aid – targeted investments must be made in future technologies.
The banking association emphasized that the tax loss carryforward should be expanded in order to specifically strengthen the equity base of those companies that had operated successfully in recent years and now needed “space to invest”. The Capital Markets Union had to be further advanced in order to make it easier for successful European companies to access more equity. Investments in research and development now have to be ramped up, tax incentives and advantageous financing conditions are necessary.
The funding policy should also be adapted according to the proposals of the banks in order to support targeted investments in future technologies and the restructuring of the economy. Since one should not only rely on public funds, the banks’ room for maneuver in lending would also have to be increased. “The financing of the upswing must not fail due to regulatory obstacles and requirements,” warned the banking association.
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(END) Dow Jones Newswires
November 30, 2020 04:46 ET (09:46 GMT)