Time for the coalition to take action
The FDP-led Federal Ministry of Finance is setting out to replace Germany's economic weakness with a new economic dynamism. On the same day that State Secretary of Finance Florian Toncar (FDP) announced political solutions in Berlin following an early consultation process with business and science, the federal party headquarters of the Liberals sounded the same horn. General Secretary Bijan Djir-Sarai called for a "genuine economic turnaround" to be initiated quickly. This would be the only way to achieve an upturn by 2025 at the latest.
This media double whammy is certainly no coincidence. The study by the economic research institute Ifo, which the Federal Ministry of Finance commissioned, would not have been needed to prove Germany's severe weakness as a business location. The most critical areas for action were also clear even before the Ifo surveyed experts: A shortage of skilled workers, excessive bureaucracy, a lack of digitalisation, dilapidated public infrastructure, and high energy costs. The government coalition, with the participation of the FDP, does not have a problem of realisation but a problem of implementation. The political ideas are too different. The coalition partners of the Liberals, the SPD and the Greens – including the Federal Minister of Economics, Robert Habeck (Greens) – want to solve the economic weakness with more money and debt. However, this does not help at all with many of the problem areas, such as reducing bureaucracy.
Not much time left to talk
The so-called traffic light coalition does not have much time left to talk – it has to act urgently in 2024 if it wants to boost the economy. Experience shows that political initiatives must be published in the law by the end of the year before an election year or by the following spring at the latest if they are not to be crushed in the election campaign. The effects of a positive economic stimulus also only come after a certain time lag. An economic turnaround does not fall from the sky. However, the FDP, which is seen as an economy party, needs this if it does not want to go under in the 2025 federal elections.
