[Economics] German government crisis: Businesses demand economic fixes

[Aronus]

Amid the collapse of Germany's coalition government, businesses are demanding Chancellor Olaf Scholz and his cabinet take urgent action to foster growth. How can the government get Germany's ailing economy back on track?

Since Wednesday evening, Germany's three party coalition government of Social Democrats (SPD), the Greens and the liberal Free Democrats (FDP) is history. The collapse ocurred when Chancellor Olaf Scholz sacked Finance Minister Christian Lindner, from the FDP, prompting other liberals to step down from the cabinet.

Last week, an 18-page so-called position paper of Lindner's was leaked to the public. In it he advocated for a moratorium on regulations and tax cuts, abolishing a solidarity surcharge in income tax for high-earners, and pushing back climate targets to 2050.

Most significantly, Lindner vehemently opposed suspending a constitutional ban on excessive borrowing — Germany's debt brake — to plug a roughly €10 billion ($10.7 billion) hole in the federal budget for 2025. He also proposed to dissolve the Germany's climate fund, with which the government is financing its green transition projects.

Lindner's paper, titled "Economic transition for Germany — economic concepts for growth and inter-generational fairness," sparked outcry from coalition government partners, who immediately refused to support these measures.

The SPD's co-chairman, Lars Klingbeil, on Sunday described the document on Germany's ARD broadcaster as "nothing more than neoliberal ideology."

Felix Banaszak, the Greens designated co-chairman, told ARD: "This whole document breathes the spirit of 'I actually don't want to do this anymore'." Banaszak added that reversing agreed-upon government decisions is "the opposite of providing planning certainty."

 

 

 

German government crisis: Businesses demand economic fixes – DW – 11/07/2024