German economy could return to pre-crisis levels in early 2022: finance minister

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BERLIN (Reuters) – The latest economic data raised hopes that Germany’s economy could return to pre-crisis levels in early 2022, Finance Minister Olaf Scholz said on Tuesday.

Germany’s rising level of public debt is not a problem because the country can cope with the situation with “good growth”, Scholz told CNBC television in an interview.

Scholz dismissed concerns that state aid was artificially keeping companies in financial difficulty alive in the wake of the crisis caused by the coronavirus pandemic.

The German government has taken measures such as allowing companies to delay bankruptcy filings until the end of the year, extended from an initial deadline of late September.

Helped by these measures, the number of companies declaring insolvency in Germany decreased by 6% in the first half of 2020 compared to the prior year period.

Critics say the stay of insolvency proceedings delays but does not prevent the collapse of “zombie companies” that are artificially kept afloat.

Companies are making the necessary decisions and adjustments despite the crisis, Scholz said. For example, many companies are currently cutting their workforces instead of resorting to state aid that would allow them to reduce working hours, he said.

“The zombie business debate is nonsense,” Scholz said.

Reporting by Christian Kraemer, writing by Kirsti Knolle, editing by Maria Sheahan

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