State of the economy – support for companies controversial
The German economy is in a slump. Unlike in the rest of Europe, it is recovering only poorly from the lows triggered by the Corona crisis and the Ukraine war. How the government can support companies is highly controversial. Economics Minister Robert Habeck (Greens) relies on a state-subsidized, lower industrial electricity price until Germany generates more electricity from renewable energies.
But Chancellor Olaf Scholz (SPD) is not a fan of the concept, Finance Minister Christian Lindner (FDP) rejects it. For EU legal reasons, one should only support industry and not crafts.
Instead, the FDP relies on tax relief. But the corresponding law did not get through the cabinet this week because family minister Lisa Paus (Greens) opposed it.
Lindner and Paus fight for basic child security
The traffic light coalition wants to combine state support services for families in a basic child security system and ensure that everyone who is entitled actually gets it. So far, only a small proportion of families have made the relevant applications.
It is disputed, however, whether the services should also be expanded – and what that will cost. After months of back and forth between Lindner and Family Minister Paus, neither of whom deviate from their positions, Chancellor Scholz has given a written word of authority. A unified draft law should be available by the end of August. A working group from several ministries is currently taking care of this – but it can be heard that it is getting tight.
Federal budget: Debt brake must hold
After months of bickering between Finance Minister Lindner and his colleagues, the budget for 2024 has been decided in the cabinet. But that is only a sham peace, because very few are satisfied with the planned cuts. Demands have long been coming from the SPD and Greens to either raise taxes for the rich or to tap into the protective shield introduced because of the high energy prices in order to give them more budgetary leeway. Lindner categorically excludes both.
The draft budget is now in the Bundestag, where some things are usually rearranged. But the same applies here: the debt brake, which sets strict limits on new federal borrowing, must hold. Another exception this year could hardly be justified.
For a stable pension level: Lindner and Heil rely on shares
Here the coalition has two construction sites: the future of the Riester pension for private old-age provision and the future financing of the statutory pension. Government advisers warn that as early as the 2040s, more than half of the federal budget could flow into pensions.
If the pension level is to remain stable, the federal government must come up with something. Lindner and Labor Minister Hubertus Heil (SPD) rely on shares. A capital stock is to be built up from public funds, the proceeds of which flow into pension contributions. But many believe the risk of the capital markets crashing is too great. The Greens have doubts about the constitutionality.
Faeser’s tightened migration policy meets with resistance from the Greens
In migration policy, Federal Interior Minister Nancy Faeser – who is also the SPD top candidate in the Hessian state election campaign – recently relied on tightening. For example, Faeser brought into play a detention pending deportation that would be extended from the current ten days to four weeks in the future. Or opportunities to deport non-convicted clan members or other members of criminal organizations if there is a clear link to criminal activities. Both met with resistance from the Greens.
Index rents: SPD and Greens see a need for action
The SPD in particular is pushing for a reform of index rents. With such contracts, rents can be increased annually with inflation, which has been quite high recently. With this variant, there is no adjustment of the rent to the local comparative rent. The Greens have also reported a need for action here in the past.
In the FDP, however, such demands find no friends: Justice Minister Marco Buschmann (FDP) recently replied that the problem was not a lack of regulation but a lack of living space. In order for investments to be attractive, stable income is also needed.
Editors beck-aktuell, Theresa Münch and Martina Herzog, August 17, 2023 (dpa).
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From the news archive
Parental allowance and CO2 price: where the federal budget brings cuts, report from the beck-aktuell editorial team of August 11th, 2023, becklink 2028024
From objection to approval: controversy about Faeser’s deportation plans, report by the beck-aktuell editorial team from August 3rd, 2023, becklink 2027962
Lindner’s budget plans: Strict budget course – and many construction sites, report from the beck-aktuell editorial team of July 4th, 2023, becklink 2027606
Traffic light coalition struggles to find the right path in tenancy law, report by the beck-aktuell editorial team from February 13th, 2023, becklink 2026123