Ministers discuss budget crisis - reliability urged
Ahead of consultations between the federal and state economics and energy ministers this Monday, economist Marcel Fratzscher warns against withdrawing subsidies that have already been promised. "I expect the federal government to fulfill all its commitments without exception. Because if it fails to do so, it will cause enormous economic damage," the President of the German Institute for Economic Research (DIW) told the Funke Mediengruppe newspapers.
The economics and energy ministers of the federal states will discuss the effects of the Karlsruhe budget ruling with Federal Minister Robert Habeck (Greens) in Berlin. Afterwards, Habeck, the Chairman of the Conference of Economics Ministers, Bavaria's Head of Department Hubert Aiwanger (Free Voters), and the Chairman of the Conference of Energy Ministers, Saxony-Anhalt's Head of Department Armin Willingmann (SPD), will appear before the press. Federal Chancellor Olaf Scholz (SPD) has announced a government statement for Tuesday.
Following the ruling of the Federal Constitutional Court, there is a large gap in the federal government's finances. The court had declared a reallocation of corona loans of 60 billion euros from the 2021 budget null and void. Since the judges' decision, there has been uncertainty - including about the consequences for the federal states. Following the ruling, Schleswig-Holstein, for example, declared a budget emergency for 2023 and 2024, as the federal state has also been working with emergency loans since the coronavirus pandemic.
North Rhine-Westphalia's Minister of Economic Affairs, Mona Neubaur, said that it was necessary to discuss how necessary subsidies could be financed. It is also important to work together in alliances across party lines. The CDU and FDP in the federal government should also make a note of this.
Uncertainty about funding decisions
Fratzscher said that a significant proportion of the promised funding was for projects in structurally weak regions, especially in eastern Germany. "The federal government should immediately present a solution that gives everyone the certainty that its promises will be fulfilled."
The Second Chairman of the IG Metall industrial union, Jürgen Kerner, also warned against suspending subsidies. "This would create great uncertainty among companies, which would result in a lack of investment in the future," he also told the Funke newspapers.
Saxony-Anhalt's Minister President Reiner Haseloff said on the ARD program "Anne Will" that Scholz had immediately contacted him and Saxony's Minister President Michael Kretschmer after the Karlsruhe ruling to discuss subsidies for investments in the region. "And he told us clearly that he is committed to these projects and will do everything to ensure that they go ahead. And we take the chancellor at his word."
Debate on the debt brake
The debate on a further suspension of the debt brake continues ahead of the consultations. Fratzscher said that the Federal Government should also suspend it next year.
SPD parliamentary group leader Rolf Mützenich also sees reasons to declare a budget emergency in 2024. When asked on the ARD program "Bericht aus Berlin" how he would justify the emergency for 2024, Mützenich cited the war in Ukraine and the situation in the Middle East, which it was unclear whether it would develop into a regional war.
SPD chairman Lars Klingbeil made similar comments on the ARD program "Anne Will". He called for a reform of the debt brake. Haseloff also sees possibilities to justify an emergency situation. The Federal Constitutional Court has made a clear statement on budgetary technique, he said. "But in terms of the political determination of what constitutes an emergency, there is room for maneuver."
Dietmar Bartsch, leader of the Left Party parliamentary group, called the debt brake an investment brake in the Redaktionsnetzwerk Deutschland (RND), which endangers the future of the country and exacerbates the social divide.
The coalition partner FDP, on the other hand, stands by the debt brake, according to its parliamentary group leader Christian Dürr. "I am aware that the FDP is rather alone with its very clear stance that the debt brake must remain firmly in the Basic Law," he said on Sunday evening on the ZDF program "Berlin direkt". There is no revenue problem at federal and state level, but rather an expenditure problem. The federal government would now negotiate where savings could be made.
The Household sector might be affected significantly if the federal government fails to fulfill its economic commitments, as warned by economist Marcel Fratzscher. Given the budget crisis following the Karlsruhe budget ruling, the Federal Government needs to formulate an economic policy that ensures the fulfillment of all subsidy promises to avoid causing economic damage to various sectors, including households.
Source: www.dpa.com
