The money will be taken from funds approved to help the government fight the coronavirus pandemic but which “have not been used,” Lindner said in his first major announcement since taking office on Wednesday.
The government had signed a loan plan of 240 billion euros in 2021 to finance measures to mitigate the impact of the pandemic on businesses but will now only need 180 billion euros. The German coalition government of the Social Democrats (SPD), the Greens and the liberal FDP has announced ambitious plans to tackle climate change, including the end of coal-fired electricity and the production of 80% of electricity in from renewable energies by 2030.
With an eye on the powerful auto industry, the parties have also decided to put 15 million fully electric cars into circulation by 2030, up from just over 500,000 currently. Lindner said the new funds would also be used to invest in the “digitization” of the German economy. The plans will be presented to cabinet on Monday, he said.
Debt brake – With the new government pledging not to raise taxes or take on new debt, many have wondered how it intends to finance investments in modernizing the country and tackling climate change. During the three-party coalition negotiations, the center-left SPD and the Greens initially offered more flexibility on fiscal policy.
But Lindner’s pro-business FDP managed to push for a tougher stance on public finances. The coalition has pledged a return to the so-called debt brake – a rule enshrined in the constitution that normally limits Germany’s public deficit to 0.35% of overall annual economic output – by 2023 .
The debt brake has been lifted to help fight the coronavirus pandemic. “It is only by ensuring stable finances that we can meet the demand for intergenerational fairness,” Lindner said on Friday. The reallocation of funds has drawn criticism from the opposition, with some questioning whether the move is compatible with the German constitution.
Christian Haase of the conservative CDU said the move was “questionable under budget law … It remains to be seen whether it will stand up to legal scrutiny.” But a source at the Finance Ministry said the former Conservative-led government did the same with its € 130 billion stimulus fund launched in June 2020, after the first wave of the coronavirus.