BERLIN: German Chancellor Olaf Scholz will hold meetings with his top two ministers to seek common ground after they put forward contradictory plans to fix the nation’s economy, a government source told Reuters on Sunday.
A document leaked by Christian Lindner’s finance ministry in Berlin last week laid out a plan for tax cuts and fiscal discipline that political analysts interpreted as a challenge to the multibillion euro investment programme put forward by Economy Minister Robert Habeck days earlier.
The standoff is the latest escalation in a row over economic and industrial policy between the FDP, the Greens and Scholz’s Social Democrats that has fuelled speculation of the coalition’s potential collapse, less than a year before elections are due.
Industrial slump leaves Germany on brink of recession
A government source told Reuters that Scholz and the ministers would hold several meetings in the coming days, saying that “now that everyone has submitted their paper, we have to see how they fit with each other”.
A different source said the 10 billion euros ($10.86 billion) made available to the government after the semiconductor project they were intended for was put on hold by Intel would play an important role in resolving the standoff.
The sources asked not to be named because they were not authorised to speak publicly on the issues.
Fiscal hawk Lindner has proposed scrapping the funds from the budget, while Habeck has said they could be reallocated.
A worsening business outlook in Europe’s largest economy has widened divisions in Scholz’s ideologically disparate coalition over policy measures to drive growth, protect industrial jobs, and reinforce Germany’s position as a global industrial hub.
While Habeck wants the creation of a fund to stimulate investment and to get around Germany’s strict fiscal spending rules, Lindner advocates tax cuts to spur the economy and an immediate halt on all new regulation.
In a local newspaper interview, SPD leader Lars Klingbeil said he was willing to discuss Lindner’s proposals, but that some of them were untenable for his party, which released its own economic plan earlier in October.
“Giving more to the rich, letting employees work longer and sending them into retirement later - it will come as no surprise to anyone that we think this is the wrong approach,” Klingbeil told the Augsburger Allgemeine.
Opposition parties, including the conservative Christian Democrats (CDU) and the far-right Alternative for Germany, called for early elections on Sunday, with conservative parliamentary group manager Thorsten Frei telling newspaper Welt that this “would be the last service [the government] could render to our country”.
If one of the three governing parties pulls out of the coalition, the chancellor can call for a parliamentary confidence vote, which if lost would allow the president to trigger elections.
In the past, chancellors and their parties have taken this route to strengthen their position, but polls suggest the SPD, the Greens and the FDP are vulnerable to heavy electoral losses should elections be called.
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