Stimulus Package

Politics • European • Germany
Germany to reduce VAT as part of stimulus package
Angela Merkel in 2019
Angela Merkel in 2019 Credit: Raimond Spekking (Creative Commons Attribution ShareAlike 4.0)

The cabinet of Chancellor Angela Merkel’s agreed on Friday to cut VAT from 19% to 16% for all goods from July 1 until December 31 and give parents a cash handout of €300 per child as part of its €130 billion stimulus package.

Affected by the Covid-19 pandemic, Germany's economy is expected to shrink by 6.3% this year, its worst recession since World War Two.