As of: January 31, 2024, 9:51 a.m
By: Amy Walker
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The budget for 2024 will be passed in the Bundestag this week.
Meanwhile, the dispute over financing the energy transition continues to rage.
A new alliance calls for reform.
Berlin – The 2024 federal budget is finally due to be decided this week.
Before that, the government has to exchange blows with the opposition during the general debate in the Bundestag - but then the financing plan for the current year should be in place.
But the issue of the debt brake is unlikely to be off the table for a long time.
Even if FDP Finance Minister Christian Lindner continues to insist on maintaining and complying with the debt brake, there is increasing resistance to his type of financial policy.
There is increasing public discussion about reforming the debt brake.
Industry and environmentalists warn: “Continue like this” puts cohesion at risk
An alliance of industrial unions and environmentalists has now come together to persuade not only the traffic light government, but the entire federal government to rethink.
A “business as usual” approach to financial policy cannot solve the central challenges of the time, according to a statement from the IGBCE union together with the environmental associations DNR, Germanwatch and WWF Germany.
“Important projects had to be cut or put on hold, investments in transformation are being played off against social equality,” said the alliance.
“This further increases the uncertainty among companies and households and urgent investments in climate neutrality – especially in energy-intensive industries – are not being made.
The bottom line is that Germany’s competitiveness and good jobs, the achievement of climate protection goals and social cohesion are all being put at risk.”
Resistance to the debt brake is growing
The alliance calls for a factual exchange from both the traffic light government and the opposition in order to work on solutions and examine options such as “a reform of the debt brake, a special fund for climate protection and strengthening the revenue side without prejudice”.
The alliance is not alone in its appeal.
There has now been a public debate about whether the debt brake in its current form is still appropriate.
Critics fear that important investments in the transformation of the economy cannot be made because there is not enough money without taking on new national debt.
What is new, however, is that not only climate and environmental activists are opposing the debt brake, but employers are increasingly also seeing the need for reform.
“The restructuring of industrial production is only progressing in small steps because the government coalition cannot agree on reliable and sustainable framework conditions,” recently stated the central district manager of IG Metall, Jörg Köhlingert.
New majorities emerged as employers increasingly accepted that the transformation of industrial society could not be carried out on the side.
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Some economists also see the debt brake as a problem.
The “economic wise men” are now calling for comprehensive easing.
“We want to increase flexibility and create scope so that future-oriented public spending can be made without undermining the sustainability of state finances,” said the chairwoman of the Advisory Council for the Assessment of Overall Economic Development, Monika Schnitzer.
“The debt brake as it is now is too rigid.”
IMF calls on Germany to relax the debt brake
And internationally, the stubbornness with which Germany insists on the debt brake is increasingly met with shaking heads.
The International Monetary Fund (IMF) has called on Germany to ease the debt brake in order to stimulate economic growth.
“Germany is paying the price for its very tough debt brake,” said IMF chief economist Pierre-Olivier Gourinchas in an interview with Handelsblatt
and
three other European newspapers.
The Federal Republic is in a different situation than some of its European partners.
“The German debt level is completely under control,” said Gourinchas.
At the same time, the structural spending needs are increasing, for example in climate protection, defense policy or energy independence, said the economist.
“The best solution would be to relax this constitutional regulation,” he recommended, with a view to the debt brake anchored in the Basic Law.
Federal Finance Minister Christian Lindner defends his budget draft.
© Kay Nietfeld/dpa
The finance minister doesn't want to know anything about this so far and continues to insist on the need to comply with the debt brake.
In the
morning magazine
this week he warned against suspending the rule: "Otherwise we would have to put together austerity packages or increase taxes at some point, just for the debts of the past." In addition, compliance with the debt brake is "a constitutional requirement" that cannot be done arbitrarily - and can turn it on.
Investments in infrastructure or education, for example, would have to be financed as part of the debt brake.
“We don’t have a revenue problem, we have to set priorities and we can do it,” said Lindner.
Germany will soon be back to pre-crisis levels “through discipline”.
In addition, investments would be increased and the tax rate would also fall for citizens and companies.
With material from dpa