Finance Minister Lindner speaks of an economic turnaround, Chancellor Scholz of a dynamization package: The traffic light coalition wants to present an overall package for the ailing German economy. What should that look like?
Chancellor Olaf Scholz was demonstratively confident yesterday during the government questioning in the Bundestag. “We can do it,” said the SPD politician. The discussion focused on the so-called dynamization package, the planned measures to give the ailing German economy a new boost.
The dynamisation package is to be presented together with the draft budget – this is the declared aim of Chancellor Scholz, Finance Minister Christian Lindner and Economics Minister Robert Habeck.
“The so-called dynamization package is well advanced,” says Habeck. “It is not yet fully finalized, but we expect significant stimulus for the economy, which is also measurable and can increase economic growth as early as next year.”
This is urgently needed. The German government is only expecting growth of 0.3 percent for the current year, and is currently expecting one percent for 2025. Germany is lagging significantly behind other industrialized countries in some cases.
FDP’s twelve-point plan
The FDP in particular had called for the budget negotiations to be linked to a growth package. In April, the party presidium presented twelve points for an “economic turnaround”: tax relief, no new social benefits, and the abolition of retirement at 63.
There was some harsh rejection, particularly from the SPD. But the three coalition leaders Scholz, Habeck and Lindner have met many times to find out what they can agree on. And in the government questioning yesterday, Scholz hinted that something should be done about taxes.
“Yes, we have very specific tax relief plans,” said the Chancellor. “For example, with regard to research funding and the things that go with it. Or depreciation options. And that's why you can be sure: you just have to wait a little longer and then you'll see all these things.”
Scope for investment
It is likely that the improved depreciation options for companies will be expanded or extended through the so-called Growth Opportunities Act. This is intended to create more scope for investments.
Other possible focal points of the package: work incentives for people receiving citizen's allowance and those close to retirement age. This is intended to counteract the shortage of workers. The package is also likely to contain new proposals for reducing bureaucracy.
Lindner does not want any new debt
One thing is not to be expected, however: a large debt-financed investment program, as repeatedly demanded by the SPD and the Greens. Because Finance Minister Lindner does not agree: “Value creation and growth do not come from redistribution and subsidies.”
The FDP politician is convinced that the stimulus package must also be based on the budget's possibilities – and these are limited because of the debt brake. Instead of new loans, clear priorities are needed.
The draft budget and the stimulus package are expected to be ready on Friday. Then it should become clearer how much power the package really has.
