Germany’s so-called economic wise men (including – shock! – one woman) are better known for hedging than hyperbole. So their grim coronavirus warning on Wednesday is worth heeding: Europe’s largest economy is facing a “grave recession”, with the steepest quarterly slump since such records began half a century ago looming. With Germany’s Covid-19 death toll nearing 2,000, economic concerns seem secondary. Yet it is hard to shrug off an economic forecast of -4.2 per cent this year, including an ear-popping 9.8 per cent slump in the second quarter: double the worst collapse in the 2009 financial crisis. Anxious to sugar-coat their bitter pill, the economists who advise Chancellor Angela Merkel paint a short-and-painful scenario that sees the economy growing by 3.7 per cent next year. The worst effects, they hope, “should be overcome in one or two years”. Another consolation is that Germany’s decade-long run of growth – and balanced budgets – has helped fill the exchequer war chest.  Berlin has mobilised every reserve and cranked up every economic generator to insulate business from the worst economic shocks. Depending on how you measure it, this amounts to cash gifts, loans and other liquidity worth between €750 billion and many trillion.

The state-owned KfW bank has received around 6,500 loan applications for nearly €21 billion in liquidity – which it can raise on capital markets at sovereign state conditions. Short-term liquidity of up to €15,000 has flowed to thousands of businesses. Wednesday’s report predicts Germany’s jobless rate will increase only modestly, from 5.1 to 5.4 per cent. This increase of just 236,000 reflects the huge up-take of short-time working provisions, where the state subsidises wage and non-wage costs to help struggling companies retain staff. Within weeks the number of short-time workers in Germany has jumped by 2,300 per cent to 2.4 million. An extra provision allows people minding children at home, but with jobs they are unable to do from there, apply for two-thirds of their lost income. Though not a nation of optimists, Germans are already planning for the recovery. Car factories and other revenue-generating industries should be allowed back first, economists say, while teleworkers should stay at home.

After getting ahead on Covid-19 testing, they hope Germany now can get ahead on recovering.