German minister calls for more money for companies as debt debate rages

German minister calls for more money for companies as debt debate rages

By Reham El Koussa and Klaus Laure

BERLIN (Reuters) – Germany’s economy minister called on Thursday for more government funds to support businesses as debate raged over whether Berlin should suspend its debt brakes next year.

Germany suspended its deficit limit of 0.35% of GDP during the COVID-19 pandemic.

The government introduced several packages this year to help residents and businesses cope with rising inflation, but Economy Minister Robert Habeck said more money was needed.

“If we take the right measures now, I don’t think it should fail because of the money. It would be a wrong political decision,” Habeck told an industry conference in Berlin.

The ability of German companies and industries to invest is a bit worrisome given the high energy prices, he said, adding that replacing Russian energy imports will cost Europe’s largest economy around 60 billion euros ($59 billion) in 2022 and 100 billion next year.

“It must be done quickly or it will be too late,” he said.

His comments reflect differences within the ruling coalition government where the liberal FDP oversees government coffers.

Earlier on Thursday, Finance Minister Christian Lindner defended his position to stick to his plan to return to the country’s debt brake enshrined in the constitution next year – even if it is a lonely position.

“Given the current state of affairs, this is not only possible, but necessary,” Lindner said at an insurance industry conference.

However, he said any further suspension of borrowing limits could be a “last resort” in the event of some unexpected catastrophic development.

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Germany should not set a standard for getting out of this, Lindner said, adding “even if it makes me feel a little lonely”.

Lindner previously said the planned relief measures are possible within the current budget plans for 2022 and 2023 as inflation drives up tax revenue.

However, government costs are escalating due to the explosion of energy prices.

(1 dollar = 1.0120 euro)

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