The biggest single set of measures in the country’s history will distribute cash to the health service, to workers and towards measures helping businesses weather the pandemic.
The German government, which in recent years has rigidly stuck to running a surplus, will borrow the money to finance the package - the first time it has taken on new debt since 2013.
“We will do everything that is necessary to defend jobs, businesses, employment and health,” said finance minister Olaf Scholz.
“We are able to do that and we are using that opportunity now in this crisis.”
The government is also setting up an ‘economic stabilisation fund’ for large-scale aid to businesses, especially large companies, with €100bn for state-owned development bank KfW, €400bn of guarantees for private sector loans and up to €100bn to buy stakes in companies to stop foreign takeovers.
Scholz told a press conference his plans were based on the government’s projection that Europe’s largest economy will shrink this year, with GDP expected to contract by about 5%.
Ratings agency Standard and Poor’s has said the world economy is probably already in a recession “here and now”, and the eurozone as a whole is expected to see its economy shrink slightly this year.
Eurozone finance ministers agreed last week to take joint, coordinated action against the coronavirus.
Leader of the group Mário Centeno said: “We will do whatever it takes and more, to restore confidence and support a rapid recovery.”
