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Fin Min-Coalition Partners' Budget Demands "Unrealistic"

GERMANY

In an interview with Reuters TV German Finance Minister Christian Lindner states that the budget demands from his coalition partners are excessive and "simply unrealistic", highlighting the much-speculated divisions evident within the governing federal coalition.

  • Lindner stated that "Their wishes are disconnected from the economic fundamentals," with the additional spending amounting to EUR70bn, with the demands reaching EUR100bn per year from 2025 onward.
  • The finance minister leads the pro-business liberal Free Democrats (FDP), the smallest party in the three-member federal coalition. While the FDP is socially liberal like its coalition partners, it is a strong supporter of fiscal prudency from gov't.
  • This stands in contrast to Chancellor Olaf Scholz's centre-left Social Democrats (SPD) - the largest party in gov't - and the environmentalist Greens (the second largest), which both are more inclined towards a looser fiscal policy. Lindner stated that even with tax hikes (strongly opposed by the FDP) the additional spending desires would not be achievable.
  • While the federal gov't is unlikely to collapse any time soon, such deep divisions could hamper policy-making areas on the economy and in other areas, as gov't departments controlled by ministers of different parties reduce communication or cooperation.
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