November 2, 2024
German finance minister demands policy shift as coalition pulls apart #NewsGerman

German finance minister demands policy shift as coalition pulls apart #NewsGerman

CashNews.co

Amid growing disputes within Germany’s governing coalition, Finance Minister Christian Lindner has demanded a fundamental “reorientation” of economic policy in a policy paper made public on Friday.

Lindner, a budget hawk and the leader of the pro-business Free Democrats (FDP), has been sharply at odds with the rest of Chancellor Olaf Scholz’s centre-left coalition over budget issues, tax policy and how to boost Germany’s sputtering economy.

In the paper, which was obtained by dpa after it was first published by Stern magazine, Lindner demands an end to the solidarity surcharge to finance rebuilding the former East Germany, an extra tax on high earners, as well as an immediate moratorium on any new business regulations.

The paper also calls for Germany to back away from ambitious national climate targets, and instead rely on EU-wide climate targets.

The undated paper demands an “economic turnaround” with a “fundamental revision of key political decisions” in order to avert damage to Germany’s attractiveness for business and investment.

The German economy is in a growth crisis, according to the paper, and a reorientation of economic policy could strengthen the confidence of companies and private households.

Lindner later wrote in an email to party friends, seen by dpa, that the policy paper was only meant to be discussed in governmental circles, calling its publication an “indiscretion.”

He wrote that his paper proposed an “alternative direction for our country,” which is to be discussed by the coalition government.

The coalition parties are deeply divided over the draft budget for next year, with Lindner demanding deep cuts and Economy Minister Robert Habeck instead fighting for spending backed by new government debt.

In his email, Lindner wrote that those supporting spending “give the impression that a state without a debt brake could buy new growth.”

“In doing so, they ignore the fact that debt costs money,” he said.

According to Lindner, Germany has neither too low taxes nor too little government spending. “A new realpolitik must rather state that Germany affords itself a labour market that does not reward activity, but tolerates inactivity.”

Germany has the capital needed to modernize the country, strengthen its security and open up space for an economic recovery, he wrote. “We are just using our capital in the wrong way.”

Parliament is currently supposed to pass the budget by November 29, but it remains unclear whether the coalition can reach a compromise to make up for billions of euros in remaining shortfalls.

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