After the push by the SPD chairwoman Saskia Esken to negotiate a renewed suspension of the debt brake because of the high inflation, there is a dispute in the traffic light coalition. The FDP does not want to go along with that.
“We will have to talk in the coalition about the debt brake or other ways of financing,” Esken had told the Tagesspiegel, with a view to possible further relief packages for citizens and companies because of the sharp price increases.
FDP leader and Federal Minister of Finance Christian Lindner has declared compliance with the debt brake from 2023 non-negotiable, Chancellor Olaf Scholz (SPD) has officially supported this so far, but the pressure is growing in the SPD that because of the high price increases and the consequences of the Russian war should renegotiate the issue, at the same time solid state finances are a brand core of the FDP, which has come under heavy pressure in the polls.
The Secretary General of the Liberals, Bijan Djir-Sarai, told the Tagesspiegel about Esken’s move: “The debt brake is in the Basic Law. It is non-negotiable and I would like more respect for the provisions of our constitution at this point.”
This coalition has already mobilized unprecedented future investments: 60 billion euros for climate protection and 100 billion euros for the modernization of the Bundeswehr are just two examples. In addition, relief measures in the tens of billions have been initiated to relieve the burden on citizens and alleviate the effects of inflation.
Now, however, the debt brake should be complied with again. “What you can’t do is keep going into debt. We’re not only fueling price developments, we’re also making existing debt more expensive because our creditworthiness is falling,” stressed Bijan Djir-Sarai.
Esken, on the other hand, points out that other countries see few alternatives to new debt because of the major challenges. “The European Union has also said very clearly that it would be fundamentally wrong for public budgets to forgo investments in favor of debt rules.” She shares this view. “Climate change, demographics, social cohesion – these tasks don’t take a break “, emphasized the SPD chairwoman: “That’s why we have to look for ways to continue investing and to be able to finance our socio-political projects.” According to information from the Tagesspiegel, the next coalition committee is planned for June 22 in the Chancellery.
In the current year, almost 140 billion euros in new debt will be made, Lindner only wants to agree to new relief in the case of cuts in other areas. Most recently, the debt brake was suspended three years in a row due to the corona pandemic and the consequences of the Russian war in Ukraine.
This is possible in the event of an acute disruption of the economic balance, otherwise the debt brake only allows a maximum of 0.35 percent of gross domestic product to be taken on as structural debt, which could be estimated at almost ten billion euros next year.
Esken emphasized that further measures would be needed. “Some countries are planning to lower VAT rates on groceries. Spain, Great Britain and Italy want to levy taxes on excessive profits.” There are also sectors that not only made huge profits because of the war against Ukraine, but also during the corona pandemic and distributed to their shareholders the crisis profits that were partly tax-financed are: “It doesn’t work that way,” Esken told the “Tagesspiegel”. But the FDP has also so far rejected so-called excess profit taxes.