German coalition parties put off decision on coronavirus stimulus package

Parties in German Chancellor Angela Merkel's coalition wrestled on Tuesday over final details of a huge stimulus package to aid recovery from the COVID-19 pandemic, including whether cash incentives to buy new cars should exclude combustion engines. Senior members of Merkel's conservative CDU/CSU bloc and the co-governing Social Democrats (SPD) planned to negotiate until 11 p.m. (2100 GMT) on Tuesday and resume talks on Wednesday after a cabinet meeting, a SPD party spokeswoman said. Initially, a final deal was expected on Tuesday.

"It will take a long time and probably will not end today," SPD co-leader Norbert Walter-Borjans told reporters ahead of the talks as he entered the chancellery. "There are packages that can be agreed on...but there are also things the CDU and CSU have problems with, for example, always when it comes to (helping households with) small- or medium-sized incomes.

"And there is a big topic that we need to talk about, namely that from our point of view, there cannot be a purchase incentive for cars with combustion engines," he added. The CDU/CSU is focused more on helping companies and high earners hit hard by the pandemic.

The fiscal stimulus package, which comes on top of an unprecedented 750 billion-euro ($837 billion) rescue package agreed in March, will include measures worth up to 100 billion euros, government and coalition sources have said. The package is meant to help companies and employees rebound more quickly from a pandemic that is expected to plunge Europe's largest economy into its deepest recession since World War Two.

SPD Finance Minister Olaf Scholz wants the stimulus measures to be "timely, targeted, temporary and transformative". Among the proposals on the table are cash handouts for families to boost consumption, extra relief for municipalities struggling with lower tax receipts, and further funds for companies with fewer than 250 employees.

Economy Minister Peter Altmaier, of the CDU, has suggested additional support for the automobile industry, including subsidies for environmentally friendly technologies and cash incentives to buy new cars with zero or low carbon emissions. Underlining the extent of the economic crisis, the number of German workers on reduced hours rose to 7.3 million in May, with almost all sectors represented, an Ifo poll showed.

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