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Germany € 300 child bonus – Government’s way of raising consumption

Data from the Federal Statistical Office has revealed that the € 300Corona-Familienbonus‘ (a special child bonus of EUR 300, received by everyone who works in Germany) that the government allocated to every family has done more in raising the economy than reduced VAT.

Most families in Germany used the child bonus paid out last year to buy durable consumer good such as clothing, furniture or a computer.

The stimulus revealed to the Federal ministry that 60 percent of households prefer spending money on consumption. This was especially for low incomes households that wanted to use the bonus to pay off debts, raising the chart to a whopping 70 percent in expenditure. Every fifth family in Germany wanted to pay off their debts with the additional money.

The child bonus was paid out late last year in two instalments in September and October and this year should guarantee the recipients 150 EUROS.

When comparing the effect of the stimulus to the reduced VAT it was significantly noted that it had a weaker effect on consumption.

The Federal Statistical Office took note that 15 percent of households said they wanted to make purchases in December when the VAT was 20 percent as compared to in August when it was only 15 percent.

Most households with children chose to benefit the most from the reduced VAT.