Dispute in the government over measures to stimulate the German economy is coming to a head

Dispute in the government over measures to stimulate the German economy is coming to a head

According to a report by www.stuttgarter-zeitung.de,

The dispute within the federal government over measures to stimulate the German economy continues to escalate, with the FDP and the Greens in particular disagreeing. FDP General Secretary Bijan Djir-Sarai called for a clear positioning from Chancellor Olaf Scholz and did not rule out the traffic light coalition failing on the issue. This dispute has already caused great resentment and leading economists are also calling on the federal government to overcome their differences so as not to further unsettle the economy.

Federal Economics Minister Robert Habeck (Greens) and Federal Finance Minister Christian Lindner (FDP) have been arguing for weeks about the right way to boost the sluggish German economy. While Habeck is in favor of a corporate tax reform and wants to finance this with new debt, Finance Minister Lindner strictly rejects this and calls for the solidarity surcharge, which companies also pay, to be abolished. The SPD, in turn, is critical of Lindner's proposal.

According to a twelve-point plan by the Union parliamentary group to stimulate the economy, this package of measures would cost the state more than 40 billion euros annually. The Union is now calling on Scholz to an economic summit because the economy is collapsing and the “traffic light” is hesitating. The upcoming meeting of the Prime Minister's Conference could therefore also focus on the state of the economy.

According to leading German economists, the various disputes within the traffic light coalition are one of the reasons for the poor economic situation. Political uncertainty in Germany is currently as high as it was in Great Britain in the year of Brexit. The economy is suffering from this uncertainty and time is running out for quick and decisive decisions to be taken to revive the economy.

It remains to be seen how the governing parties will reach an agreement, as the country's economic development will be significantly influenced by these decisions.