Germany’s Scholz rules out welfare cuts despite budget crisis

German Chancellor Olaf Scholz (SPD/S&D) has ruled out cutting welfare spending to close the country’s budget gap following a constitutional court ruling, rejecting calls from liberal Finance Minister Christian Lindner.

Scholz’s ruling SPD party (S&D) announced its stance at the party convention in Berlin on Saturday, going against its liberal coalition partner.

“The Federal Constitutional Court’s decision has not made the question of how we set up our budget for the coming year and how we develop budgetary policy any easier,” Scholz said on Saturday.

“But it is very clear to me that in such a situation, there will be no cutbacks to the welfare state in Germany,” he added.

“There’s one debate that crops up regularly when the opportunity arises, namely that the problem with our society is that our welfare state is too generous. Let me tell you, I don’t see it that way,” Scholz said.

This follows calls by liberal Finance Minister Christian Lindner (FDP/Renew Europe), who said that cuts were necessary in welfare spending, international aid, and subsidy programmes.

“The federal government spends 45% of its expenditure on social affairs. We will look at how we can become more targeted,” Lindner said in an interview last week.

Of the 45% spent on social affairs, the largest shares are used to support the country’s pension system and to pay benefits to the long-term unemployed.

As an increase of long-term unemployment benefits by 12% is planned for the turn of the year, conservative opposition leader Friedrich Merz (CDU/EPP) has called on the government to scrap it as a response to the budget crisis.

“The inflation rate is significantly lower than assumed at the beginning of the year,” Merz told broadcaster ARD last week.

“That’s why the 12.6% that [Labour Minister Hubertus] Heil is now planning is simply too much when you consider that those who receive it as social benefits should have an incentive to enter the labour market,” he added.

During the SPD convention, Katarina Barley (SPD/S&D), vice president of the European Parliament and leading SPD candidate in next year’s European elections, echoed the chancellor’s position, citing the euro crisis as a warning example.

“In Europe, they know very well what it means to want to overcome crises with austerity,” Barley told the convention, adding that “it meant pension cuts, it meant overall cuts in social security contributions, cuts in health services. And as we know, that did these countries anything but good”.

On the convention’s first day on Friday, SPD party co-leader Lars Klingbeil called for a change to the country’s strict ‘debt brake’, arguing that public investments were necessary in light of the green transition and industrial policy in China and the US.

(Jonathan Packroff | Euractiv.de)