Criticism of thrift in Germany: ‘Not to the government’

For four years, German families and companies received generous government support, almost without anything in return. But in 2024 the federal government wants to tighten its belt. Compared to the current budget year, more than 30 billion euros must be saved. All ministries are losing out, except – because of the war in Ukraine – Defense. The intended budget for next year will be around 445 billion euros.

“Politicians have to learn again to come out with the money they receive from citizens,” said Christian Lindner earlier this year. After months of negotiations within the coalition, the liberal German finance minister reached an agreement this month on the financial household for 2024. Even the debt brake, which was temporarily set aside during the corona crisis, has been partly dusted off again.

Lindner’s large-scale austerity plans have been criticized for weeks. The welfare of workers and jobseekers is seriously at risk, warns the Bundesagentur für Arbeit (BA), the German counterpart of the UWV. “In the coming year, the Job Center will need sufficient resources to be able to provide the benefits,” Andrea Nahles, the SPD member who heads the agency, told the newspaper. Tagesspiegel.

Nahles complains that the government agency will have to do with 700 million euros less in the coming year than in 2023. In the meantime, not only are the resources lacking, there are also too few employees to process the benefit applications. All this coincides with the introduction of the Bürgergeld, the new collective name under which German benefits fall from 1 July. The German Social Democrat is pinning her hopes on the benevolence of the Bundestag. “It is not the federal government that decides on the budget, but the parliament.” In September, the Bundestag finally votes on Lindner’s budget proposal.

Minister Lindner also wants to cut child benefit for parents who together earn more than 150,000 euros on an annual basis. Now that amount is still at 300,000 euros. There has also been outrage about this – and not only among the high earners. ‘A class struggle from above’, is how activist Celsy Dehner calls the announced austerity measure. “The families that are not so well off are falling even further behind. It should be about them,” Dehner told German broadcaster NDR.

Since the corona crisis, German public finances have been thrown off balance. The debt brake, which had long been sacred and was even enshrined in the German constitution, was – already under the government of ex-chancellor Merkel (CDU) – set aside. With billions of dollars in support, the government was ready to keep families and businesses afloat. Then came the energy crisis. Now that both crises seem to have passed their peak, Lindner thinks it’s time to restore fiscal rules. The German liberals are working to reduce the mountain of debt.

Yet more government money should be added, according to the traffic light coalition, which, in addition to Lindner’s FDP, consists of the SPD of Chancellor Scholz and De Groenen. In an interview with TV channel ARD, Ricarda Lang, the chairman of the ecological party, called for a “new investment agenda for Germany” to mitigate the effects of the economic contraction. Germany has been in a recession since this year and the prospects are not rosy either. The German economy is expected to shrink by 0.3 percent this year, the International Monetary Fund (IMF) predicts.

At the same time, Germany faces the gigantic task of greening German industry. Lindner and Lang’s party colleague Robert Habeck, the ‘super minister’ of the Economy, cannot agree on keeping the price of electricity affordable for large consumers. Deindustrialization threatens Germany, an exodus of chemical and steel companies that can produce cheaper outside Europe, critics warn. “Since the economic boom, the country has been sleeping. German industry is in decline,” writes the daily Welt.

In the meantime, Germany also has to step up its game in many other domestic areas. After defense, German economists are calling for large-scale investments in education, digitization and transport, according to a recent survey among economists by the economic institute Ifo. “Every citizen should benefit from the collective expenditure of the government,” says Ifo researcher Niklas Potrafke. That is not the case now, says Potrafke. According to the economist, ‘a large part of the expenditure’ seeps away to parties with which the government cooperates.