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Budget agreement: IWH economist misses social balance

The Deputy President of the Leibniz Institute for Economic Research Halle (IWH), Oliver Holtemöller, misses a social compensation in the planned increase in the CO2 price. The professor of economics told MDR on Wednesday after the federal government's budget agreement.

Oliver Holtemöller presents the Joint Economic Forecast Autumn 2023 at the Federal Press....aussiedlerbote.de
Oliver Holtemöller presents the Joint Economic Forecast Autumn 2023 at the Federal Press Conference. Photo.aussiedlerbote.de

CO2 price increase - Budget agreement: IWH economist misses social balance

The Deputy President of the Leibniz Institute for Economic Research Halle (IWH), Oliver Holtemöller, misses a social compensation in the planned increase in the CO2 price. The professor of economics told MDR on Wednesday after the federal government's budget agreement.

"Raising the CO2 price is something that economists have long recommended in order to achieve climate protection targets efficiently," said Holtemöller. "The concept that economists recommend actually also includes ensuring a social balance. This means, for example, returning the revenue generated by carbon pricing to citizens and companies in the form of a climate money. This component is not included in the package - at least as far as we know today - and that is certainly a shortcoming." Other components of the agreement are very welcome.

Four weeks after the historic budget ruling by the Federal Constitutional Court, the traffic light coalition had agreed on how to close the billion-euro gap in the 2024 federal budget. One of the plans is to increase the CO2 price, which will have an impact on petrol and gas prices.

Read also:

  1. In Saxony-Anhalt, a discussion about the impact of the increased CO2 price on household budgets is ongoing, with local politicians expressing concerns about social equalization.
  2. According to an economic research report from the Government, the increase in the CO2 price will lead to higher costs for households for items like household cleaning products, which contain energy-intensive materials.
  3. Oliver Holtemöller, the Deputy President of the IWH, suggests that the revenue generated from carbon pricing should be bypassed back to citizens and companies in the form of a 'climate money' to help offset these costs.
  4. The Federal Government has not yet announced any plans to include such a social compensation mechanism in the agreement, which has raised concerns among experts like Holtemöller and household advocates.
  5. MDR interviewed Holtemöller about his views on the budget agreement, and he emphasized the importance of considering the social implications of the CO2 price increase, particularly for lower-income households and small businesses in regions like Saxony-Anhalt.

Source: www.stern.de

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