As of: February 8, 2024, 3:31 p.m
By: Amy Walker
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The economist Veronika Grimm criticized the federal government's economic policy on the Markus Lanz show.
Because of their disagreements, they can hardly really help the economy.
Berlin – According to the economist and “economic wise man” Veronika Grimm, the traffic light coalition is taking the wrong path in economic policy by constantly trying to represent all party interests.
The compromises “ultimately led to the market not functioning properly, but the interventions also not being powerful enough,” said Grimm on the ZDF program “Markus Lanz” on Wednesday (February 7).
Industrial electricity price as an example of “weak transformation policy”
As an example, the economy cited the industrial electricity price, which the traffic lights could not agree on for a long time.
Economics Minister Robert Habeck (Greens) had advocated a lower electricity price for industry, which would be subsidized by the government for a few years.
Liberal Finance Minister Christian Lindner (FDP) has long opposed this.
In the end, the three traffic light partners agreed to reduce the electricity tax for energy-intensive companies.
“In the end, this is a very weak transformation policy,” said Grimm.
According to Grimm, politicians must deal honestly with the fact that there can be no “business as usual” due to the challenges in the country.
“The central problem is that the promise that no one will have to accept cuts and that everything will remain more or less as usual cannot be kept.”
Demographic change alone shows exactly this problem: people have to work more and longer, even beyond retirement age.
“Economists have been saying for years, for decades, that here [in pension policy, ed.
Red.] Adjustments have to be made,” says Grimm.
But there is a lack of political courage to tell those who can afford it that there must be cuts.
With the budget verdict in Karlsruhe, the federal government's house of cards collapsed: investments could be made beforehand without "the FDP becoming too nervous about the debt brake," explains the economist.
Now a lot of the money is gone.
“And the question is whether the coalition has the strength to move forward.”
Lindner and Habeck are arguing again
Veronika Grimm also dismantled the promise of a “green economic miracle”, as Economics Minister Habeck had promised in the past, at Lanz.
“We have chances, that’s right.
But we also have to do a lot to increase these opportunities.”
To do this, however, a lot must first be invested in structural change - which the coalition is currently having a hard time with because they cannot agree on how.
Economics Veronika Grimm was a guest of Markus Lanz © Screenshot/ZDF
Habeck and Finance Minister Lindner are currently arguing about ways to relieve the burden on companies in Germany.
With a view to the sluggish economy, both had expressed different ideas.
Lindner suggested, for example, abolishing the solidarity surcharge, which would also relieve the burden on companies.
However, government circles said that the volume of around twelve billion euros in the 2025 budget could hardly be financed.
According to estimates, there is already a financing gap of 25 billion euros.
Habeck had proposed a loan-financed special fund for investments, but backtracked after criticism from the FDP.
He also suggested better depreciation conditions in order to quickly stimulate investments in new production facilities.
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Business associations are demanding that the government do something to stimulate the economy and do something for Germany as a business location because of international competition.
The fact that both Habeck and Lindner were campaigning for relief initially raised hopes that the traffic light coalition would overcome its internal blockade.
Whether this will ultimately happen remains to be seen.
With material from Reuters