Germany’s coalition parties vowed to prioritise economic growth in challenging times and despite fiscal prudence, as the pro-market FDP also demanded more support from European Commission President Ursula von der Leyen to reduce Germany’s bureaucratic burden.
The German parliament returns from its summer recess this week, allowing the governing SPD, FDP and Greens to present their priorities for the coming weeks.
While the first session will include a debate on the government’s 2024 budget proposal on Thursday, the state of the economy and the promotion of economic growth will also be the main topics of Chancellor Olaf Scholz’s plenary speech the following day, a government spokesman said.
“We’re facing an economic situation that is about psychology – it is now our task to boost innovation and investment and thus to stimulate and develop the economy,” Saskia Esken, co-leader of the SPD, the senior coalition partner, told reporters..
“Economic stimulus and investment in social security” would be the government’s main priorities in the upcoming budget talks, Green Party leader Britta Haßelmann confirmed.
Germany is expected to be the only major economy to shrink this year, according to several forecasts, as it has been hit particularly hard by the war in Russia due to its dependence on Russian gas.
However, there is little room for economic stimulus as Finance Minister Christian Lindner, leader of the FDP, is pushing to stick to the debt brake, a constitutional clause that limits borrowing, which his partners have reluctantly accepted.
“It’s important to return to a post-crisis budget after we suspended the debt brake during the pandemic and other crises, which requires budget cuts,” Esken acknowledged.
The government would know soon how much space it has for further measures as an initial estimate of tax returns is due in November, she said. The final version of the 2024 budget is due to be passed in December.
EU rules and directives “not constructive”
Meanwhile, the FDP and the Greens lauded the government’s recent economic interventions, including a patchwork of tax cuts passed at the cabinet’s retreat last week and investments into the green transition.
The FDP also pointed to the government’s push to reduce Germany’s bureaucratic burden while calling on Brussels to cut regulations.
“We need a European initiative [for bureaucracy relief], and it would be good if we got support from the Commission president Ms von der Leyen,” Bijan Djir-Sarai, the FDP’s general secretary, demanded.
He explicitly criticised the Corporate Sustainability Due Diligence and Energy Performance of Building Directives as “not constructive”.
Germany’s recent announcement of a joint push with France to cut red tape in Europe was thus a vital step to cut red tape, Djir-Sarai said.
(Nick Alipour | EURACTIV.de)
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