Berlin: German Chancellor Olaf Scholz is set to meet with his top two ministers in a bid to find common ground following the emergence of contradictory plans aimed at revitalizing the nation’s economy, according to a government source who spoke to the international news agency Reuters on Sunday. A document leaked from Finance Minister Christian Lindner’s ministry last week outlined a strategy focused on tax cuts and fiscal discipline, which political analysts interpreted as a direct challenge to the multibillion-euro investment program proposed by Economy Minister Robert Habeck just days earlier.
This standoff highlights the escalating tensions over economic and industrial policy among the coalition partners—the Free Democratic Party (FDP), the Greens, and Scholz’s Social Democrats—sparking speculation about the potential collapse of the coalition less than a year before the upcoming elections. A government source indicated that Scholz and the ministers would engage in several meetings in the coming days, noting, “Now that everyone has submitted their paper, we have to see how they fit with each other.”
A separate source mentioned that the €10 billion ($10.86 billion) made available to the government after Intel paused a semiconductor project could play a crucial role in resolving the deadlock. The sources, who requested anonymity, were not authorized to speak publicly on the matter. Lindner, known for his fiscally conservative stance, has proposed removing these funds from the budget, while Habeck believes they could be reallocated to stimulate growth.
The deteriorating business outlook in Europe’s largest economy has widened divisions within Scholz’s ideologically diverse coalition regarding policy measures aimed at driving growth, protecting industrial jobs, and strengthening Germany’s position as a global industrial hub. Habeck advocates for the creation of a fund to stimulate investment and navigate Germany’s stringent fiscal spending rules, whereas Lindner supports tax cuts to boost the economy and an immediate freeze on all new regulations.
Also Read | IMF to Commence Review of Egypt’s Loan Programme on Tuesday
In a recent interview with a local newspaper, SPD leader Lars Klingbeil expressed his willingness to discuss Lindner’s proposals, although he stated that some were untenable for his party, which unveiled its own economic plan earlier this month. “Giving more to the rich, letting employees work longer, and delaying retirement—it will come as no surprise to anyone that we think this is the wrong approach,” Klingbeil told the Augsburger Allgemeine.
Also Read | Czech Republic Joins Italy in Opposition to CO2 Fines for Carmakers
Opposition parties, including the conservative Christian Democrats (CDU) and the far-right Alternative for Germany, have called for early elections. Conservative parliamentary group manager Thorsten Frei remarked to the newspaper Welt that this “would be the last service [the government] could render to our country.” If one of the three governing parties exits the coalition, the chancellor may call for a parliamentary confidence vote, which, if unsuccessful, would enable the president to initiate elections. Historically, chancellors have used this strategy to bolster their position, but current polls indicate that the SPD, the Greens, and the FDP could face significant electoral losses if elections are held.
