EES Live (05/2025)

April 1st, 2025

EES EU Live (04/2025) - The Digital Senators' Briefing  
Video Live Talk with Dr. Ingo Friedrich, President of the European Economic Senate (EES), on current European topics.

“The New Germany Plan - An Assessment of the Situation”

Germany has voted. The CDU/CSU and SPD are in coalition negotiations. A minority government with the support of the AfD is out of the question for the CDU/CSU. The SPD, the Greens, and the Left Party do not have a governing majority.

Governing normally begins when the new Bundestag begins its work and the new government has been formed. Therefore, it was a great surprise that, with the support of the Greens, a major amendment to the Basic Law was passed even before the new Bundestag took office. This amendment passed the Bundesrat last Friday and was then confirmed by the Federal President. This involves the creation of a "special fund" amounting to €500 billion and the relaxation of the debt brake for the federal and state governments. Experts assume this will authorize additional new borrowing of up to €1,000 billion (€1 trillion). Overall, we are therefore talking about an authorization volume of up to €1.5 trillion or more.

With these resources, one can achieve a great deal and do a great deal of good, for example, catching up on investments that have so far been neglected. However, the debt can also backfire if the funds are used for clientelist politics, inefficiently, only to plug holes, or predominantly for consumption purposes.

And what one must never forget, despite all the possible sense of spending, is that it is and will remain debt for which one has to pay interest and which will have to be repaid sooner or later.

Now the coalition negotiations are entering the home stretch, and the GROKO's Germany plan is taking shape. However, there is still no agreement on some issues, such as taxes. If the SPD were to prevail with its proposals here, it would amount to a tsunami of tax increases.

In our monthly EES Live, we will discuss what is important now and what possible scenarios are with Reiner Holznagel, President of the German Taxpayers Association, the top expert when it comes to controlling government spending and taxes.