Germany will re-evaluate all subsidies that are not aligned with its key priorities as part of its efforts to reduce public spending, Chancellor Olaf Scholz said at an industry conference in Berlin on Monday.
While Germany has reacted to both the pandemic and the energy crisis with heavy subsidies, this should not become the new normal, said Scholz.
“All this was right,” Scholz said, adding that it was “just as right […] that we now return, step by step, to fiscal normality as before the Corona crisis, before the energy crisis”.
“After spending billions due to the crisis, spending can return to levels we were comfortable with for years before the crises,” he explained.
With this, Scholz backs Liberal Finance Minister Christian Lindner (FDP), who is calling to reduce public spending to reduce inflationary pressures.
At the conference, Lindner sparked confidence to publish a draft budget for 2024 at the beginning of July, a step that proved challenging as some ministries did not agree to planned cuts under their responsibilities.
“Security, climate neutrality, social cohesion: these are the three priorities reflected in the 2024 budget,” Scholz said. “Conversely, this also means that some subsidies and support programmes will be put under scrutiny.”
Lindner, however, warned that despite his efforts to prioritise, “as in previous years, the 2024 budget will be dominated by social spending, by defence spending, and recently also by spending on interest payments,” which he called “past-oriented expenditures”.
“The budget of the Federal Republic of Germany – if this country wants to have a future – cannot be characterised in the long run by financing the past or by defensive spending,” Lindner said.
“We need to turn the tide towards investment, research and everything that lays the foundation for future prosperity,” he added.
Among other things, he would therefore work on a tax reform that would encourage private investments in green technologies. To improve competitiveness with the US, Lindner also called for progress in developing the Capital Markets Union.
“Our problem is not the level of subsidies from the public sector. Our problem is that we do not have a developed private capital market in Europe,” Lindner said.
(Jonathan Packroff | EURACTIV.de)
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