Berlin Just as politicians of different orientations were able to agree in the traffic light coalition, economists of different schools of thought also endorse the contents of the coalition agreement. The SPD, Greens and FDP presented this on Wednesday. “The coalition agreement calms me down,” said former economics boss Lars Feld. Achim Truger explained: “The coalition agreement sends really good, energetic signals.”
In particular, the considerations in the area of financial policy had sparked great discussions among economists. It was clear that the traffic lights wanted to keep the debt brake. This limits the state’s borrowing – and thus the government’s financial leeway. However, there had been various suggestions as to how the traffic light could still invest massively in climate protection and digitization.
Almost all of the proposals can now be found as options in the coalition agreement. This includes a larger role for the state-owned KfW Bank, loan programs for public companies such as Deutsche Bahn and public-private partnerships. At the same time, the traffic light is committed to reviewing government spending.
This has been popular with economists, both from liberal and state-minded scientists. Feld explains: “The feared escalating financial policy will not come.” All sorts of possibilities for circumventing the debt brake and for additional debt are shown. “But these remain limited, and opportunities for spending cuts should also be used.”
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Unusual agreement on financial policy
The President of the RWI Economic Institute, Christoph Schmidt, stated: “The coalition agreement shows the will to preserve the long-term ability of public budgets to act.” He also welcomed the plan to put funding and spending programs to the test.
“The coalition agreement shows pragmatic financing options for the extensive public and private investments required,” praised Monika Schnitzer.
“The coalition agreement calms me down,” says the ex-chief of the economy.
(Photo: imago images / photothek)
However, it remains unclear which financing options will pull the light. It is therefore questionable whether all of the new government’s projects can be financed. “All in all, the coalition agreement in the area of financing remains fairly vague,” says Düsseldorf economist Jens Südekum.
The future finance minister will now have to show how he wants to put this into practice. The minister would find it difficult “to demand iron budget discipline from his traffic light partners”.
Ifo President Clemens Fuest said that in principle it would make sense to rely on a combination of spending cuts and borrowing as part of the debt brake. “Overall, I think that the projects can be financed with this package of measures,” said Fuest. But it will only be possible to assess this precisely when the plans are concrete.
The economists are also surprisingly satisfied with another controversial topic, climate protection. “Overall, the coalition agreement is moving in the right direction with regard to climate protection, with potential for improvement,” said Claudia Kemfert from the German Institute for Economic Research (DIW).
Will the future finance minister succeed in insisting on budget discipline? Asks the Düsseldorf economist.
(Photo: imago images / Jürgen Heinrich)
“You can tell in the coalition agreement that the traffic light parties are striving for a more ambitious climate policy. I am particularly pleased that the contract expressly provides for an initiative to found an international climate club, ”says RWI boss Schmidt.
Eucken Institute President Feld also praised him: “The market-based approach has also prevailed in terms of climate protection.” The SPD, Greens and FDP are planning clear state interventions in order to carry out the green transformation.
There should be contracts for the reimbursement of climate costs, and an industrial strategy will be formulated. “Basically, however, one thing is clear: it will only be possible to fix it with instruments that are in line with the market,” says Feld.
More competition in business
In addition to the financing issues, the traffic light wants to promote the economy in particular through better competition and the reduction of bureaucracy. Particularly noteworthy is one formulation: “We advocate an abuse-independent unbundling option at the European level as a last resort on solidified markets.”
This sentence can be clearly identified as penned by the Greens. The party had already formulated it in this way in 2016. What is described is nothing more than breaking up large corporations as a last resort. Especially with digital giants like Google or Meta, this option is mentioned again and again due to their steadily growing market power.
However, the usefulness of this measure is controversial. “If you cut off the hydra’s head, another grows back,” says Oxford researcher Viktor Mayer-Schönberger.
In addition to the content-related aspects, the economy will also play an important role in personnel issues. With the head of the Bundesbank and a place on the Advisory Council of Economic Wise Men, the traffic light will fill two leading positions with an economist.
According to Handelsblatt information, who this will be was already discussed in the main round of negotiations at the traffic light. A procedure for the occupation has therefore been agreed. The exact personal details are still open.
More: The coalition stands: “The traffic light will be groundbreaking for Germany”