Germany will enter a hard lockdown from Wednesday, with non-essential stores shuttered, employers urged to close workplaces and school children encouraged to remain at home.

The tighter restrictions — including a ban on gatherings over the New Year — will last until at least Jan. 10 after a looser shutdown failed to halt a surge in daily coronavirus infections and deaths. Chancellor Angela Merkel agreed the measures with the heads of Germany’s 16 states in talks Sunday and warned of rising pressure on the nation’s health system.

“There is an urgent need for action,” Merkel told a news conference. “We have seen rising infections and exponential growth in recent days and that means that we have to grieve many dead.”

After comfortably handling the initial wave of the pandemic, the country is lagging behind many of its neighbors, and officials came under increasing pressure to act days before Christmas. Infections and fatalities rose by record amounts on Friday, and almost 22,000 have died from the disease, out of a total of 1.3 million cases.

“The coronavirus is out of control, so we don’t want to do things piecemeal but act decisively,” Bavaria Premier Markus Soeder said alongside Merkel, describing the pandemic as a “catastrophe” and calling for a national effort to tackle it. “If we’re not careful, Germany will quickly become the problem child of Europe,” he warned.

Germany’s stumbles in dealing with the disease are linked to its complex and at times dysfunctional federal system, Merkel’s pursuit of open borders and political power plays ahead of next year’s national election. It puts Europe’s largest economy at risk of another blow to consumer and business confidence after the spring lockdown triggered a collapse in activity.

A group of retailers wrote to Merkel warning of “disastrous consequences” if stores are closed during the key shopping month of December, Bild newspaper reported Sunday. “You are also irrevocably sealing the insolvency of thousands of retailers and putting millions into unemployment,” Bild quoted the letter as saying.

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