Et isn’t a day that goes by without bad economic data. On Monday they affected retail. Contrary to expectations, his income did not increase in June, but decreased. In the first half of the year, retail sales were 4.5 percent less in real terms than in the same period of the previous year, according to the Federal Statistical Office. Last week, new figures on the development of gross domestic product – stagnation instead of growth – and the forecast of the International Monetary Fund caused a stir. The IMF expects a decline in economic output for Germany this year. Even the Brexit-stricken Brits should do better.
It had already become apparent in the past few months that the situation in Germany was not improving, but was continuing to deteriorate. But many politicians in the government wanted nothing to do with the crisis. The Chancellor promised a new green economic miracle. Everything is heading towards Germany, said Olaf Scholz (SPD) back in June at the “Industry Day” in Berlin. But now the nervousness is growing.
In the summer interview with ARD on Sunday, Green party leader Ricarda Lang called for a “new investment agenda for Germany”. Investment premiums for more climate protection, a cheap industrial electricity price and investments in the railways and in hospitals are needed. The goal is “a country that just works,” says Lang. The traffic light coalition will “put together a joint package” for this.
Economists call for strengthening of public administration
The parliamentary group leader of the Greens, Andreas Audretsch, told the FAZ again on Monday: “Germany has to become more competitive, we need a bold investment agenda for that now.” According to his ideas, investments should be made in electric cars, green steel and innovations in the chemical industry and in hydrogen technology. “Christian Lindner’s investment bonus is a good move, but unfortunately it has ended up being a miniature model,” criticizes Audretsch, referring to the finance minister’s law on growth opportunities. Companies investing in new technology should receive “substantial support”.
The Council of Experts, which advises the government on economic policy issues, is pushing for other priorities. “In my view, the most urgent reform measure would be to strengthen public administration. Not by increasing the number of jobs, but by streamlining and digitizing the administrative processes,” said Council Chairwoman Monika Schnitzer of the FAZ. For a “citizen- and company-oriented administration”, the previous paper processes should not simply be transferred to digital. The processes would have to be completely redesigned. “Unfortunately, one does not get the impression that this topic is being promoted with the necessary priority.”
For Veronika Grimm, another of the five “wise men”, the expansion of the energy supply is central. “Political decisions are often inconsistent,” she criticizes. “The nuclear power plants have been shut down, further reducing the supply of electricity. As a result, the prices are higher than necessary, and now people are considering subsidizing the price of electricity for energy-intensive industry with billions. That can’t go well.” There is still a lot of regulatory uncertainty when it comes to the expansion of hydrogen networks and the design of the electricity market. “This reduces the willingness of companies to invest.”
FDP General Secretary Bijan Djir-Sarai warned on Monday against making private investments more difficult due to ever-increasing state burdens. “If the advocates of a four-day week, tax increases and even more bureaucracy are now concerned about the competitiveness of the economy, then it is the first step towards insight,” Djir-Sarai told the German Press Agency.
Traffic light coalition split over industrial electricity price
“Germany does not lack public investments, but private ones. That’s why medium-sized companies, trades and industry should simply be left alone in the face of the constant burdens. The latter had criticized the government for delaying investments and guarding the national budget like “grandma’s cookie jar”.
The President of the Munich Ifo Institute, Clemens Fuest, gives the traffic light coalition mixed testimony: “Positive approaches are such as facilitating the immigration of skilled workers or the idea of promoting private investments in the medium term through accelerated depreciation,” he says. “I think the course of heavily steering investments with subsidies and conditions is wrong. A policy would be required that improves the site conditions across the board.”
The traffic light coalition is divided on the subject of industrial electricity prices: Economics Minister Robert Habeck (Greens) wants it, Finance Minister Christian Lindner (FDP) does not. Both agree that, despite the poor general economic data, now is not the time for a classic economic stimulus package. The economists see it that way too. As much as the citizens would like more money in their wallets – this does not help in the current situation, according to the tenor.
“It is precisely the aim of the interest rate hike by the ECB to push back demand and thus lower inflation again as quickly as possible,” emphasizes Schnitzer. Ifo boss Fuest would make an exception for housing construction. “Capacities will probably soon be vacant here, and politicians could take measures to stimulate housing construction, for example depreciation allowances.”
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