You have to be careful these days about who is demanding a chance for a new beginning and who you actually want to give it to: the traffic light government, for example, after chaotic government weeks, plastered with misjudgments bordering on hubris; or a Bavarian Minister of Economics after the worst gaffes became known, which – yes, even if they come from school days – leave you stunned more than 30 years later (and for which the actual problem may also lie more in dealing with it here and now).
But in general: There is a chance for improvement and it is all the more urgently desired the bigger the acute problems are. This is how you have to classify the results of the cabinet meeting this week in Meseberg, Brandenburg. Not everything that was decided in and around Meseberg was good, but at least some things point in the right direction. Which is something if you remember the agonizingly long weeks before the summer break, in which the traffic light coalition clearly lost all orientation.
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Above all, the relief package for companies that the cabinet cobbled together at relatively short notice gives hope: for some sectors less bureaucracy and less paperwork, but above all better depreciation rules for companies that buy new machines, as well as a bonus for larger investments, new depreciation options in housing construction and more generous rules for loss offsetting. The SPD, FDP and Greens want to relieve companies of around 7 billion euros per year.
This week, however, another government decision was irritating, which after all the hard-to-bearable wrangling about a few small reliefs for an economy that was under heavy pressure, was waved through: Twelve percent more in citizen money, formerly known as Hartz IV, from January 1st 2024, instead of 502 euros today, it will be 563 euros per month and adult from the turn of the year. A whopping EUR 4.3 billion in additional spending from next year, in addition to the hard-fought EUR 2.4 billion for the new basic child security scheme, which is aimed at the same group of recipients.
Certainly there must also be adjustments to inflation in government transfers for the needy. But just twelve percent more – without any pause and a discussion as to whether it fits the time and sets the right priorities – that’s irritating. Because it immediately raises two questions: First, what is the right balance between structural reforms and the practiced distribution policy of recent years for the traffic light coalition in the next two years, when first the coffers were full and then the pandemic was particularly great ? And secondly, what are the most pressing problems up to the end of the decade and what instruments are we going to use to tackle them?
The automatism with which, on the one hand, billions are spent on the long-term unemployed and people with low incomes – and on the other hand, with no hassle, a good 500 million euros for extra depreciation in order to revive the collapsed and urgently needed housing construction: That fits in a situation , in which the economy is no longer growing and will also have a hard time in the foreseeable future, not together.
The reasons for the currently weak to non-existent economic growth in Germany can be roughly divided into two categories. On the one hand, there are short-term reasons, which are primarily due to the global economy and weak demand here and abroad. We will hardly be able to change the crisis in China, for example, we have to get through it, but we will manage it. And then there are medium to long-term reasons that have a lot to do with structures and psychology in this country: high energy costs in international comparison, which will hardly go down in the coming years, coupled with general uncertainty about the investment conditions in Germany and the general Prospects for growth in a society that is getting older.
In this situation, the country does not need a major economic stimulus program to boost demand from the state, no new scrappage bonuses. But a clever mix of measures is needed to improve working and supply conditions for local companies and reward private investments in modernizing machinery and the energy infrastructure. Basically, that’s a throw-back for any party that puts economic policy and corporate interests at the top of its own agenda.
And this is where a weakness of the most recent traffic light resolutions is revealed: the FDP, of all people, which should now push this policy forward, is curtailing itself in its possibilities because party leader Christian Lindner, who is also finance minister, insists with great severity on compliance with the debt brake in the Basic Law. He does this because he wants to prevent even higher government spending – which is right. But it also blocks what is currently urgently needed: greater relief for companies across the board, through really generous depreciation regulations for investments and through lower energy prices.
Given the structural problems that Germany will face in the coming years, it would not have been necessary to provide 7 billion euros in relief, but rather double or triple that amount. Meseberg was neither a turning point nor a breakthrough, but at best a beginning. But at least it was the chance for a new beginning.
This opinion piece was first published by our colleagues at CAPITAL.
