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.
Polls suggest the FDP’s popularity has suffered badly as part of the unpopular coalition, and nationwide support for the party is now below the 5% threshold needed to take seats in German elections.
The stances outlined in Lindner’s paper are well-known positions of the FDP, but its timing will likely exacerbate the tensions already pulling apart the coalition.
Scholz has been promising to present a “pact with industry” following a series of summits with labour and business leaders, from which the centre-left Social Democrat (SPD) has pointedly excluded both Lindner and Habeck.
Earlier on Friday, Scholz’s chief spokesman, Steffen Hebestreit, said the chancellor plans to put forward his pact proposal before Christmas.
Scholz convened the industry summit at the Chancellery in response to stagnant growth and news of potential mass layoffs and plant closures at German manufacturers, especially the iconic Volkswagen carmaker. Scholz plans to hold a further meeting on November 15.
“This process is now under way and will come to a conclusion in the foreseeable future, I suspect by the beginning of December, mid-December,” Hebestreit said on Friday.
Whether Scholz’s summits will produce decisive proposals remains unclear. But they have emphasized just how sour relations have become within Scholz’s three-party coalition.
Linder’s FDP convened a competing economic summit, while Habeck has released papers outlining his own proposals for major investments.
There have also been conflicts within the coalition over migration and economic policy, among other contentious topics.
The next nationwide general election is currently scheduled for September 2025.
However, the conflicts between the coalition parties have raised speculation in recent weeks that the FDP might even quit the three-party coalition and force early elections, a rare event in recent German history.
Hebestreit on Friday sought to push back on such speculation, saying that the government “will work together constructively for the next 11 months or so until the regular election date for the next general election.”
He said that the coalition has held together three years, even amid foreign policy crises and considerable challenges.
He also added that he “remains confident” that a deal will be struck on the budget.
Earlier on Friday, Transport Minister Volker Wissing published an op-ed in the Frankfurter Allgemeine Zeitung newspaper in which he argued a premature break-up of the coalition would be “disrespectful” to voters.
“Coalitions are not easy. Governing is not easy. Democracy is not easy. We have a responsibility to ensure that we succeed together,” wrote Wissing, a member of Lindner’s FDP.
