In the opposition, the German Christian Lindner – leader of the Liberal Democratic Party – was quick to denounce anything that looked like a budget hoax.
In his first appearance in the Bundestag as the new federal finance minister on Thursday, Mr Lindner had to endure accusations of hypocritical creative accounting.
Looking ahead, many European capitals are hopeful that Lindner will show equal creativity in the ongoing debate on the EU’s future financial foundations.
The dispute in Berlin is over an additional budget of 60 billion euros to finance what Mr Lindner has called “the transformation of one of the largest industrialized countries towards climate neutrality“.
This transformation is at the heart of the politics – and the prestige project – of the Greens, one of the new coalition partners of the FDP with the Social Democratic Party (SPD).
“It’s not just people who need a boost, but our economic development as well,” said Lindner. “We cannot waste time with the pandemic. “
But the opposition, the Christian Democratic Union (CDU), has screamed scandal and this week asked the Constitutional Court to verify the legality of the budget, which reallocates unspent pandemic emergency funds.
On Thursday in the Bundestag, CDU finance spokesman Christian Haase accused Mr. Lindner of “pick-pocket tours”.
“In a miraculous transformation, corona loans become climate loans,” he said. “The pandemic is an exceptional emergency. . . climate change is a long-lasting challenge that we must include in our regular budget.
Some constitutional lawyers say the finance minister‘s decision is problematic in at least two ways: it violates the principle that budgets are only good for one year, and it puts a strain on the principles of the debt brake on the government. Bundestag.
This self-imposed measure forces German MPs to support only balanced budgets. Set aside during the pandemic, the FDP succeeded in coalition talks to reactivate the debt brake from 2023. Because the pro-business party also got a guarantee of no new taxes, the first task Mr. Lindner’s as finance minister has been to raise unspent money for climate investment.
As German political parties use the budget line to get used to their new roles, Mr Lindner’s praise on Thursday for “transformative investing” will have ears praised across Europe.
In opposition, the FDP has traditionally been an advocate of the post-war German social market economy, emphasizing only a limited role of state intervention in the economy. But the new government appears poised to move beyond a love of balanced budgets and aversion to debt-financed investments.
During his first visit as finance minister to Paris, however, Lindner warmly said that encouraging economic growth was “the best circumstance for stable finances”.
The flexibility of the German minister on how to achieve this economic growth goes hand in hand with the new coalition agreement, calling for a “simpler and more transparent” Stability and Growth Pact – governing the debt levels of the members of the the euro zone.
In addition, the coalition promises to “further develop fiscal rules.” . . to strengthen their effectiveness in the face of the challenges of the time ”.
As Berlin will activate private investment and reallocate public money back home for its climate transformation, the German daily Süddeutsche Zeitung sees a “back door” open at EU level. Some observers see an initiative to strike an ambitious new agreement with France on rewriting post-pandemic EU and euro financial rules. The big economists are more careful.
“France is already working to rewrite the budgetary rules so that climate and investment projects are excluded from the deficit rule,” said Professor Lars Feld, one of the government’s economic “wise men”. He believes Berlin is more likely to accept less ambitious Stability Pact rewrites, such as allowing members to extend their debt repayment periods.
“And for that,” he said, “Berlin should ask for something in return.”