Shortly before the cabinet meeting of Germany’s coalition government, the SPD leadership rejected what it described as a “future-hostile” austerity policy and highlighted what it considers the positive impact of the €500 billion special fund. In a resolution adopted by the SPD executive committee and seen by the Rheinische Post for its Monday edition, the party also responded to criticism from within its coalition partner, the Union, saying that “austerity is now over.”
The CDU Economic Council called for greater efforts to cut bureaucracy, while small and medium-sized businesses demanded reliable innovation funding. The cabinet meeting will take place on Tuesday and Wednesday at Schloss Neuhardenberg in Brandenburg. At the meeting, the federal government intends to finalise its plans for the coming months.
Among other issues, the discussions will focus on safeguarding industrial competitiveness, growth and jobs. Criticism of Chancellor Friedrich Merz (CDU) and his government has recently increased significantly, including from business, the opposition and within the government’s own ranks. Merz rejected the criticism and announced the rapid implementation of reforms as well as comprehensive relief measures for the economy.
According to the Rheinische Post, the SPD executive committee resolution says opponents of the special fund have complained about the debt being taken on to finance investments. “These are the same people who, for ideological reasons, pushed through an austerity policy for years at the expense of our infrastructure and the attractiveness of our economic location.” Citizens and companies are now feeling the “fatal and costly consequences of this policy.”
Federal Finance Minister Lars Klingbeil (SPD) said of the special fund: “Our investments are having an impact; they are reaching people locally.” Of the €500 billion, “more than €50 billion is already on its way,” the SPD leader added. “We will keep up the pace and continue to put pressure on the federal government, the states and municipalities so that planning and construction can move forward quickly.”
The special fund for infrastructure and climate neutrality has a total volume of €500 billion and will run for twelve years. It is intended to reduce the investment backlog in transport, energy, digitalisation and climate protection.
The CDU Economic Council called for greater efforts to reduce bureaucracy. Germany urgently needs “an administration that is digital, fast, user-oriented and reliable,” its Secretary General Wolfgang Steiger told the Augsburger Allgemeine. The federal government must also act more decisively to rapidly reduce electricity prices. The pension reform must not be reopened for discussion either. The Foundation for Family Businesses and Politics also called for decisive action to reduce bureaucracy.
Small and medium-sized businesses called on the federal government to lift the suspension of applications for research and development funding. The Central Innovation Programme for SMEs, known as ZIM, was being “held back at a time when Germany urgently needs more investment, more research and more growth,” the BVMW business association said in a letter to Federal Finance Minister Klingbeil and Federal Economics Minister Katherina Reiche (CDU), according to the Neue Osnabrücker Zeitung.
According to the Federal Ministry for Economic Affairs, applications for grants under the programme have temporarily not been accepted since July 7.
The cabinet retreat will also address the contentious issue of heat protection. The German Association of District Administrators opposed creating a new joint responsibility for climate adaptation between the federal government, the states and municipalities in the Basic Law. Association President Achim Brötel told newspapers belonging to the Funke Media Group that what was needed were “clear rules and not even more organised irresponsibility.”
The Social Democrat-led ministries recently presented an action plan in response to the heatwaves this summer. It calls for climate protection to be incorporated into the Basic Law as a joint responsibility of the federal government, the states and municipalities. The SPD proposal has caused irritation among its coalition partners, the CDU and CSU.
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