Economists on the break-up of the traffic light system Can Germany afford to wait for new elections?
The situation in Germany is coming to a head following the end of the "traffic light" coalition and the resignation of Finance Minister Lindner. Economists are warning of delays and calling for new elections - as soon as possible.
No time? blue News summarizes for you
- The break-up of the traffic light coalition and the resignation of Finance Minister Lindner have sparked a debate about the German government.
- Experts such as Clemens Fuest and Andreas Peichl emphasize that there are no unexpected emergencies that justify the debt brake being lifted.
- Both are calling for quick new elections to stabilize the economy.
Wednesday evening's "traffic light" exit has shaken Germany, Europe and the whole world. Following the dismissal of Federal Finance Minister Christian Lindner by Chancellor Olaf Scholz, the latter wants to continue governing together with the Greens until January in order to then call a vote of confidence in the Bundestag. However, the majority of Germans want new elections quickly.
Andreas Peichl is Professor of Economics at the Ludwig Maximilian University of Munich and Clemens Fuest is President of the ifo Institute - Leibniz Institute for Economic Research at the University of Munich. Both experts have looked into the break-up of the traffic light system and answer the most pressing questions.
Has Lindner blocked the economy by saying no to the debt brake?
Andreas Peichl: The economy urgently needs a viable economic policy strategy to overcome the challenges ahead. However, there is no new reason to release the debt brake, as there is no new budgetary emergency.
This would require a surprising change. But nothing comes as a surprise, neither the war in Ukraine nor the Trump victory are surprising, there has been enough time to prepare for them.
What challenges or opportunities do you expect in the coming months?
Andreas Peichl: The coming months will be characterized by considerable challenges, including economic uncertainties and the need for decisive political measures.
At the same time, there are opportunities for structural reforms and investments in forward-looking sectors that can promote sustainable growth.
What do you think of Christian Lindner's successor, economic advisor Jörg Kukies?
Adreas Peichl: Jörg Kukies is a proven expert and was already State Secretary in the Ministry of Finance. His experience from the private sector and the government could lead to a more pragmatic approach to tackling the current economic challenges.
Olaf Scholz said on Thursday that "the economy can't wait". Is that true?
Clemens Fuest: The economy urgently needs a viable economic policy strategy to tackle the challenges ahead. That's why it needs new elections as soon as possible.
Delaying new elections in order to get individual measures through parliament is damaging to economic development because it prolongs the period of uncertainty.
So are the new elections in March too late? "There is no convincing justification for the delay," explains Fuest.
Is the economy focusing more on the elections in the USA or on the traffic light system?
Clemens Fuest: Certainly both. However, neither is really surprising.
In your view, does the war in Ukraine in year 3 justify a budgetary emergency?
Clemens Fuest: No. It would have to be a surprising change. Nothing comes as a surprise, even the Trump victory is not surprising, there was enough time to prepare for it.
