Habeck advocates for supporting the economy with government assistance
The economic situation is lackluster. The revival is barely picking up speed. Germany is sliding further behind. Taking this into account, Economics Minister Habeck proposes a modernization plan. The FDP quickly defends the debt limit, with Chancellor Scholz praising the engagement.
Federal Economics Minister Robert Habeck aims to revitalize Germany and the economy using his own modernization plan. His proposals include increased support for businesses through government funding and a "Germany App" for easier social benefit applications. SPD member Wolfgang Kubicki later called these plans "simple" and "naive". The spokesperson for the government clarified that Habeck acted independently, and his paper was intended as a political discussion starter.
In a presentation three weeks before the Green Party congress, Habeck suggested a "debureaucratized investment premium" of 10% of the investment volume. Funding for this incentive would come from a joint federal and state "Germany fund" and primarily benefit "craft businesses and small and medium-sized enterprises". The fund would be active for five years, during which the public debt would only increase "moderately" due to the resulting economic growth.
At the presentation, Habeck stated that the fund must be prefunded. "I don't see any other realistic political option," he added. Habeck hoped this plan would be a viable solution for those insisting on strict adherence to the debt limit, as it has a time limit, he said, looking at Finance Minister and FDP leader Christian Lindner.
"Reality doesn't always adhere to contracts"
"This isn't about an all-encompassing review or debate on the debt limit," Habeck emphasized. "I'm trying to avoid this debate by proposing a specific, clear commitment and stating that this amount is available for this period." Habeck didn't provide an exact figure, but the Federation of German Industries (BDI) suggested a mid-three-digit billion figure for the coming years. "We're dealing with a substantial amount here, but it will be distributed over several years," Habeck noted. In his paper, he listed third-party calculations totaling 230 billion euros for infrastructure, research, and transportation.
"I'm aware this proposal goes beyond the agreed-upon measures in the coalition contract," Habeck admitted. "Things don't always follow contracts." However, Habeck noted that the current policies were slowing the economic recovery and potential growth in Germany. Habeck described his impulse paper as "heavily supply-oriented," improving economic conditions and including tax cuts. "An appealing location should also be financially viable," he emphasized. This could signify a step towards FDP concerns.
Habeck also advocated for reducing electricity costs. Other aspects of the reform plan include a new innovation dynamic, faster and simpler approvals, environmental protection as a competitive advantage, harnessing labor and skills potential, and "offensive for new trade agreements." Habeck's impulse paper contributes to the economic discussion that Chancellor Scholz has invited representatives to participate in.
The economy is divided
FDP Vice-President Kubicki criticized Habeck's lack of clarity on funding sources. He suspected Habeck's goal was to blame the finance minister for Germany's economic weakness due to his emphasis on the debt limit. Instead, Kubicki suggested focusing on agreed-upon measures, such as bureaucracy reduction. FDP MP Carina Konrad backed this stance, stating that Habeck should prioritize reduction in bureaucratic red tape.
The SPD supported the proposals, with General Secretary Matthias Miersch telling the "Rheinische Post" that Habeck's investment fund proposal could be an element. Christian Leye from the Alliance for Progress and Social Justice (BSW) welcomed the idea but questioned its implementation with the finance minister.
Crafts Association leader Jörg Dittrich deemed Habeck's proposals nearly impossible. He suggested reducing taxes and wage-related costs might be more effective. Economic experts are divided in their assessments: DIW Director Marcel Fratzscher viewed the plans critically, stating companies largely lacked trust and investment opportunities., While the employer-friendly Institute of the German Economy in Cologne criticized the unclear financing plans, other experts, such as Sebastian Dullien from the IMK of the Hans-Boeckler-Foundation, supported the concept of an investment fund. Moritz Schularick from the Kiel Institute for the World Economy praised the concept paper for adding "urgently needed momentum to the debate on necessary changes to the German economy."
In response to criticism, Habeck clarified, "I'm not going to engage in a debate about the debt limit with this proposal. I'm proposing a specific, clear commitment to provide funding for a set period."
Despite going beyond the agreed-upon measures in the coalition contract, Habeck argued, "I'm not saying things always follow contracts, but the current policies are slowing the economic recovery and potential growth in Germany."
