Scholz hopes to resolve coalition spat paralysing government

German Chancellor Olaf Scholz (SPD) invited key ministers into the chancellery on Wednesday in the hopes of resolving an ongoing dispute over family benefits that is paralysing the government, but coalition partner FDP remains sceptical on whether it will succeed.

Last week, the German government was unable to pass a €6 billion tax relief package for companies due to a de facto veto of Family Minister Lisa Paus (Greens), who said she could not agree unless more money is given to a new child benefit scheme the government wants to introduce.

“The chancellor has announced that the open questions will be clarified by the end of August,” Sandra Detzer, Green MP and spokesperson for Economic Affairs, told EURACTIV ahead of a planned meeting between Scholz, Paus and Finance Minister Christian Lindner (FDP) in the chancellery on Wednesday first reported by Süddeutsche Zeitung.

“I am confident this will succeed and that both laws can be passed quickly,” Detzer added.

Similarly, senior politicians of Scholz’s SPD party (S&D) were optimistic.

“In my view, there are no fundamental obstacles to an agreement,” Verena Hubertz, SPD’s deputy parliamentary group leader, told EURACTIV.

Reinhard Houben of liberal FDP (Renew Europe), however, remained sceptical.

“The content and financial ideas of Ms Paus are not clear until today,” Houben, MP and FDP spokesperson for economic affairs, told EURACTIV. “As long as this is the case, one can only speculate about an agreement,” he added.

Regardless of the spat over family benefits, the tax relief package for companies should be adopted at next week’s government retreat in Castle Meseberg on 30-31 August, Houben said, reminding that “the chancellor already stated last week that the Growth Opportunities Act would be passed in Meseberg”.

Houben also defended the three-party coalition against criticism from business chamber DIHK, which told EURACTIV last week that the delayed adoption of the tax breaks was a “missed opportunity for the economy”.

“Postponing the decision to the retreat will not harm the German economy for the time being,” Houben added.

Meanwhile, Green MP Detzer and SPD’s Hubertz stressed that “we need both: the Growth Opportunities Act and the Child Basic Income Guarantee”. However, funds of the government are limited as it aims to reduce public spending to comply with the constitutional “debt brake”.

“The Growth Opportunities Act contains important impulses to strengthen the economy, such as the investment premium or improved depreciation options,” Detzer added.

(Jonathan Packroff | EURACTIV.de)