German Chancellor Promises Modernization of Economy Despite Budget Setback
Chancellor’s Assurance
Chancellor Olaf Scholz reassured the German people and businesses of his government’s commitment to modernizing the economy and supporting vital industries like chip factories, despite a recent court ruling that impacted the federal budget.
Addressing Parliament
In his address to parliament, Scholz emphasized the need to address the challenges posed by the COVID pandemic, the war in Ukraine, and soaring energy prices. He extended a suspension of self-imposed borrowing limits in order to tackle the crisis that has affected his coalition.
Constitutional Court Ruling
A recent constitutional court ruling blocked the government’s plans to reallocate unused pandemic funds towards green initiatives and industry support, raising concerns about the potential weakening of Germany’s economy. This also called into question Germany’s traditionally strict fiscal policy and sparked fears of German companies losing out on global competitiveness.
Support for Vital Industries
Scholz highlighted the importance of securing investment in areas like semiconductors, climate-friendly steel production, and battery plants, addressing concerns of specific industries that fear being left behind.
Energy Price Cap Scheme
Scholz announced the government’s decision to end a scheme to cap energy prices by the end of this year but assured quick action in case prices shot up again.
Debt Brakes and Support for Ukraine
Scholz left open the question of whether the government would suspend Germany’s debt brakes again in 2024, while underscoring continued support for Ukraine in the face of the recent budget turmoil.
He also pledged to double support to 8 billion euros ($8.76 billion) next year, emphasizing the need to not let up in the support for Ukraine and in overcoming the energy crisis for the sake of the country’s future.
($1 = 0.9134 euros)
