The German line of economic thinking has a long reputation of being conservative. Austerity, debt reduction and fiscal discipline are the buzzwords that many in Europe associate with Germany. However, the consensus of German economists has been increasingly shifting to the left as of late.
One case in point is today’s report by the so-called “five economy wizards” – or Wirtschaftsweisen– an expert body that is advising the German government on all economic matters. The body is traditionally considered to be a beacon of conservative economic thinking and has been frequently criticised for its neoliberal line of thinking.
However, in the report published today, they were surprisingly progressive.
The recommendation currently making the biggest waves in Germany is their call to increase the taxes for the rich to finance the current crisis – a position that has led prompted much outcry on the centre-right.
CDU-politician Gitta Connemann, for instance, argued in the German newspaper Handelsblatt that the plans were “unrealistic and toxic”.
The experts also attacked the plans – of the government and especially the liberal FDP party – to adjust the tax system to inflation in order to relieve people from higher tax rates and proposed a more flexible approach to the reform of the EU’s debt rules.
While the position of the Wirtschaftsweisen does not encapsulate the whole of the German economic discourse, their change of heart when it comes to these topics of economic policy is indicative of a broader shift that is taking place.
The liberal FDP, which usually has only praise for the economic assessment of the expert body, found themselves under serious pressure to react to the recommendations that run against almost everything the FDP stands for.
And indeed, shortly after the release of the report, the FDP made clear they will not allow additional taxes in any form.
“The FDP’s position is clear: we will not make any additional charges. That’s how we agreed in the coalition agreement,” party vice chairman Johannes Vogel told RedaktionsNetzwerk Deutschland (RND).
When liberal Finance Minister Christian Lindner stepped in front of journalists today, the first topic he addressed was not the proposal for a reform of the EU debt rules that came out today, but his reply to the Wirtschaftsweisen – another sign of the importance of their opinion for the national political discourse.
He attempted to discredit their proposals and made clear the government won’t introduce the additional taxes for higher-income individuals as the experts were calling for.
However, it seems that the tides of the German expert community have shifted as the liberal and conservative parties now try to refute their own economic consensus while the Greens and the SPD are getting support from the (traditionally conservative) expert community.
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The Roundup
A Franco-German proposal for a new dialogue framework between Kosovo and Serbia, obtained by EURACTIV, reveals indirectly, based on the text’s interpretations, how little synergy exists between the two sides to solve the issue.
The European Commission presented its proposals to reform the debt and spending rules for national governments on Wednesday as individual plans for every EU country, negotiated between national governments and the Commission.
The European Commission on Wednesday released details of an €18-billion-economic support package to get Ukraine through 2023, which it hopes will be approved by EU member states soon.
Long-standing criticism that Microsoft has set unfair terms for running software services, like Windows, on competitors’ cloud infrastructure might result in EU antitrust scrutiny following a new complaint.
At COP27 in Egypt, German Chancellor Olaf Scholz announced extra funding for the government’s global hydrogen funding instrument, H2Global, to facilitate the global market ramp-up.
In order to meet its 2050 climate neutrality goals, Europe must quickly clamp down on fluorinated gases, a super-warming gas used mainly in air conditioning and refrigeration but also in green technologies like heat pumps.
The European Commission signed an amendment on Wednesday to its original contract with Pfizer-BioNTech after several weeks of discussions to help member states better manage their vaccine needs.
On Tuesday, left-wing MPs in the French National Assembly questioned Energy Transition Minister Agnès Pannier-Runacher’s legitimacy after she was accused of a conflict of interest by a journalistic investigation.
EU officials have been told not to hold meetings with UK counterparts unless they are strictly related to the war in Ukraine or are ‘legally mandatory.”
Georgian prosecutors announced Wednesday that they have raided call centres as part of a major international probe into a criminal gang that scammed EU citizens out of millions of euros.
Republicans made modest gains in US midterm elections, but Democrats did better than expected, leaving control of Congress and the future of President Biden’s agenda unclear on Wednesday morning.
Finally, be sure to check out the latest Green Brief: Franco-German hydrogen fight is toxic for EU, and the Health Brief.
Look out for…
- Commission President Ursula von der Leyen travels to Moldova to meet with President Maia Sandu.
- Financial Stability Commissioner Mairead McGuinness speaks at annual meeting of EU members of the American Chamber of Commerce to the EU.
- Economy Commissioner Paolo Gentiloni meets with Stéphane Dion, Canada’s special envoy to the European Union.
- Debate at European Parliament’s plenary about common level of cybersecurity across the EU.
Views are the author’s.
[Edited by Zoran Radosavljevic]
Source: euractiv.com
