HS analysis German demars and Greens give up their economic goals, Scholz says upcoming government talks are about bigger issues

In Germany, government talks will begin under the leadership of the demars, and the atmosphere seems hopeful, writes Hanna Mahlamäki, HS’s Berlin correspondent.


Multi The German political observer is surprised at how smoothly the palpation of the government base has progressed since the elections three weeks ago.

The negotiations convey a speed and unity, which is also evidenced by the fact that no leaks have been made to the media.

The rigidity, indecision, and stagnation that are sometimes associated with German politics now shine through in their absence. The new time seems to have arrived.

On Friday, the Demarien (SPD) chancellor candidate Olaf Scholz and the Greens and Liberals (FDP) unveiled a 12-page line of principle on the basis of which actual government negotiations will begin next week if the Green and FDP party governments approve the paper in the coming days.

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According to Scholz, it is supposed to be ready before Christmas.

In the declaration the votes of all three parties are heard, but some of their key objectives have also been abandoned by the parties. Without a willingness to compromise, the formation of a government would not be possible.

The formation of a government after the German elections was preceded by deep suspicion. There was talk of a possible long period of uncertainty and fears of a political impasse.

The crowd now involved clearly wants to disprove these expectations and demonstrate their ability in practice. The tireless trio repeats the upheaval of the new era, and more and more it seems that the parties really mean it.

What so the declaration contains?

Investments in tackling the climate crisis, digitalisation and education are promised and were pursued by all parties.

According to Olaf Scholz, Germany is facing the largest industrial reform project in more than a hundred years.

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The most difficult part of cooperation seemed in advance to be economic policy, without which nothing else would work. Friday’s declaration shows that even in it, the parties have been willing to compromise on their principles, and the SPD did not get the most support in the election.

Under the election, the SPD and the Greens were very similar in their economic lines, while the FDP represents an economic liberal end. To the victory of the Liberals, the red-green axis has from the outset abandoned one of its clear electoral goals, to tighten taxation on the richest.

The goal of the Demars and Greens was to tighten the income tax on those who earn the best, according to Scholz, roughly more than 100,000 euros a year for single people or 200,000 couples who earn.

It will not happen.

Wealth tax collection had already been stopped in Germany in 1997. The Democrats and the Greens would have liked to have brought it back above the two million euro mark, but here too the Liberal Party got its way.

There was an unequivocal statement: taxation will not be tightened.

The Greens sought to reform the debt brake, but the promise of the FDP and Scholz was that the debt brake would not be touched. It is a rule enshrined in the German constitution that curbs public borrowing.

According to the rule, the general government structural deficit must not exceed 0.35% of GDP. In the context of a pandemic, the provision has been relaxed, but it has now been decided to return to it.

This, too, was assessed in advance as a very difficult issue. However, it has been resolved, to the detriment of the Greens.

The trio really want to get the government done.

The simple explanation for abandoning the goals of the red-green axis is probably that the troika really wants to get the government done – and the actual reforms that are going to get them there.

The same was said by Scholz on Friday: it is a question of solutions.

The “traffic light government” undergoing its economic policy principles will also receive approval from the bourgeois side.

Scholz said on Friday that plans now include ways to boost private investment in coveted reforms, such as additional construction of wind and solar power.

According to Scholz, the reforms will also boost economic growth and thus tax revenues.

With regard to immigration, the future government is preparing major changes aimed at making it easier to move to Germany in search of work.

The sale of state-owned properties has also been discussed in advance. Friday’s declaration also mentions more effective intervention in tax evasion and money laundering. Before the election, the Greens called for a change, for example, to the possibility of buying real estate in Germany in cash.

However, it is clear that there is still much to negotiate on economic matters in the coming weeks.


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