German government in ‘crisis’ – media

Disagreements over the budget and economic policy threaten Chancellor Olaf Scholz’s coalition, state broadcaster Deutsche Welle has reported

Chancellor Olaf Scholz’s government is at loggerheads over its economic policy and the fate of next year’s federal budget, state broadcaster Deutsche Welle (DW) reported on Monday. Disagreements within the three-party coalition are reportedly so profound that they risk undermining its stability, the media outlet claimed, warning of a descent “into crisis mode.”

The German parliament must pass the 2025 budget by the end of this month. The legislature’s Budget Committee is scheduled to review the final draft on November 14. However, the government's draft budget still has a deficit of “several billion euros” and the coalition partners are struggling to agree on how to overcome this shortfall, according to DW.

Last week, the German media reported on a policy paper drafted by Finance Minister Christian Lindner, the head of the Free Democratic Party (FDP). The 18-page document calls for a radical change in the nation’s economic policy that would involve large-scale tax relief for companies as well as funding cuts for climate protection programs and reduced welfare spending.

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The plan has drawn sharp criticism from Scholz’s Social Democrats (SPD). “We do not need any papers, but joint action to help the industry quickly and ensure security,” Martin Rosemann, the labor market and social policy spokesman for the SPD in the national legislature told Tagesspiegel last week. “Above all, we do not need any opposition in the government,” he added.

Earlier, Economy Minister and Vice Chancellor Robert Habeck, himself a Green Party member, proposed a debt-financed multibillion-euro ‘Germany Fund’ to stimulate investment and encourage a transition to a climate-neutral future in his own policy paper. The proposal, however, did not sit well with Lindner and the FDP.

“We simply cannot spend as much money as some people want,” the finance minister said at the time.

With German parliamentary elections due to be held next September, all three coalition parties are seeking to increase their own popularity, often at the expense of government cohesion, DW reported. Last month, Scholz held a meeting with German industry leaders and trade union members but did not invite either Habeck or Lindner, the broadcaster said. The finance minister then responded by organizing a similar meeting of his own.

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”The popularity ratings of the coalition government have hit rock bottom,” DW reported, adding that the “outlook is grim” for all three parties. The broadcaster also speculated that the FDP could depart the coalition altogether, leaving Scholz with a minority two-party government with the Greens, which would require him to seek situational coalitions in the parliament every time he needed a majority to support the government’s plans.

Scholz himself denied any irreconcilable issues within his cabinet. “The government will do its job,” he told journalists on Monday, when asked about the situation within the coalition. “I am the chancellor, it's about pragmatism and not ideology,” he added. According to DW, the coalition is due to hold a series of meetings this week in a bid to sort out their differences.