FILE PHOTO: German Chancellor Olaf Scholz speaks at a municipal congress, organised by DEMO, a social democratic magazine for local politics, in his first appearance following his return to Germany after the G20 Summit, in Berlin, Germany, November 22, 2024. REUTERS/Axel Schmidt/File Photo
BERLIN: Chancellor Olaf Scholz raised the stakes in the campaign for Germany’s snap election by proposing an investment fund worth at least US$106bil to help pay for the country’s modernisation.
In a speech last Saturday at a Social Democratic Party (SPD) event in Berlin, Scholz said the fund, which could later be topped up, should include both public and private money and could be used for investment in areas such as energy infrastructure or home construction.
He also pledged, if he comes from behind in the polls to secure reelection, to introduce a tax rebate for companies of 10% of the value of investments in Europe’s biggest economy, calling it a “Made in Germany bonus”.
“Germany’s future must not be ruined by excessive saving,” Scholz said, reiterating a promise to loosen stringent borrowing rules known as the debt brake.
“On the contrary, new growth only comes from more investment.”
He attacked the opposition conservatives under Friedrich Merz, who have a big lead in the polls, accusing the Christian Democratic Union and Christian Social Union (CDU/CSU) alliance of lacking ideas on how to pay for what he called “Germany’s renewal”.
“Where is the proposal from the CDU and CSU as to how we invest in our neglected roads, bridges and railways?” Scholz asked. “Anyone who votes for the SPD in February can rely on this: We’re getting our country into shape.”
Germany is heading to the polls on Feb 23 after the chancellor dismantled his three-party coalition with the Greens and the Free Democrats due to a prolonged dispute over government borrowing – an issue that is now front and centre in the election campaign.
Scholz sacked his fiscally hawkish Free Democratic Party finance minister, Christian Lindner, who was unwilling to sanction a loosening of borrowing rules to help pay for the modernisation of the country’s creaking infrastructure and digital and climate transformation.
Merz has said he may be open to reforming Germany’s borrowing rules, even though the debt brake mechanism has long been sacrosanct for his conservative group.
Scholz’s surprise move pitched Germany into political turmoil at a time when its economy is barely growing and major manufacturing companies are laying off thousands of workers and considering factory closures.
Scholz is staying on in a minority government with the Greens until parliament is dissolved ahead of the election.
Without a majority in the lower house, he’s unlikely to get any major bills approved before the snap vote.
Although Scholz’s SPD is trailing in the polls, there was good news for the chancellor in a new Insa survey for the Bild newspaper published last Saturday, in which he made up significant ground on Merz.
The Social Democrat incumbent, who was officially nominated as his party’s lead candidate last Monday, would get 22% of the vote if Germans could choose their chancellor directly, up seven percentage points from the previous week.
Merz dropped one point to 30%, while Robert Habeck, the lead candidate for the Greens, lost two points to 16%, Bild said.
The survey was even more positive for Scholz in a straight choice for voters between him and Merz. The conservative leader still leads on 35% but Scholz gained six points compared with the end of September and is just behind on 33%.
Although Scholz looks to have gained some ground on Merz in a head-to-head comparison, polls show that backing for the CDUand CSU is still about twice as strong as for the SPD.
The conservatives lead at around 32%, the far-right Alternative for Germany is second with about 18% and the SPD third at 15%, according to a polling average calculated by Bloomberg. — Bloomberg
