The traffic light government wants to develop a concept in the next few months to strengthen Germany as a location. “We will need the spring for a joint program,” said Federal Finance Minister Christian Lindner on ZDF on Sunday evening. This should probably be synchronized with the discussions about the draft budget for 2025, which is to be presented in the summer.
The Union, as the largest opposition party, wants to put an immediate program to the Bundestag's vote in February. In a letter to Chancellor Olaf Scholz (SPD), CDU leader Friedrich Merz and CSU regional group leader Alexander Dobrindt submitted twelve core demands to get Germany out of recession.
“The situation is serious,” said FDP leader Lindner. For a long time, Germany's problems were covered up. But the situation has changed. Interest rates are now high, the global economy is weak for export-oriented German industry and the war in Ukraine is ongoing.
Lindner against Habeck
Lindner and Economics Minister Robert Habeck (Greens) recently described Germany as no longer competitive. However, they have other ideas on how to fix this. Habeck has in mind a debt-financed special pot so that he can invest more. Lindner, on the other hand, wants to reduce taxes for companies. The burden is too high. The traffic light government made up of the SPD, Greens and FDP needs to pick up the pace and become more ambitious, he said.
Germany was the only western industrial country to shrink in 2023. The prospects for 2024 also look bleak; the growth expectations of many experts have recently been revised significantly downwards. “Numerous companies are relocating parts or even all of their production to European or non-European countries due to the unfavorable economic conditions,” says the letter from Merz and Dobrindt, which was available to Reuters and dated last Friday. “Our country is threatened with a loss of prosperity on an unprecedented scale.”
In addition to tax cuts, the Union's proposals include limiting social security contributions to 40 percent of gross wages, giving tax advantages to overtime for full-time employees and making the first 2,000 euros of earned income tax-free for pensioners. The electricity tax must be reduced to the minimum required by European law. In addition, the traffic light government should promise a “moratorium on burdens” and thus waive additional bureaucratic burdens until the end of 2025.
CDU General Secretary Carsten Linnemann announced on ARD that his party's plans for a major reform in social policy should be presented in mid-March to abolish citizens' money in its current form. In addition, the Union, which is currently leading in surveys, is planning to withdraw the traffic light government's heating law, which is intended to ensure more climate protection in buildings. Linnemann said that with growth impulses for the economy, 50 or 60 billion euros more tax revenue could quickly be achieved.
“Instead of writing letters, the Union could immediately do something concrete to relieve the tax burden on German companies and give up its blockade of the Growth Opportunities Act,” said FDP parliamentary group leader Christian Dürr to the FAZ. The deputy chairwoman of the SPD parliamentary group, Verena Hubertz, described the law in the “Rheinische Post” as a central building block for strengthening the economy. The mediation committee of the Bundestag and Bundesrat is currently discussing the planned tax relief for companies - especially in the form of additional depreciation options. According to a preliminary agreement, the relief volume should be significantly lower, just over three billion euros, in order to protect municipalities and states. Ifo boss Clemens Fuest described this as a drop in the ocean that would not be enough.
Hubertz added that Merz's letter was surprising since the opposition leader had recently virtually ruled out working with the government. “It's quite a zigzag course.” In addition, sensible suggestions for counter-financing are always necessary, said the SPD politician.