Location Germany: Where is economic policy headed?

Status: 01/25/2023 09:27 am

Federal Minister of Economics Habeck presented the annual economic report today. The prospect: instead of a recession, a small increase in economic output. The report also deals with the restructuring of the economy.

By Hans-Joachim Vieweger, ARD Capital Studio

Fighting the crisis was the order of the day, but now an active economic policy is needed, says Marcel Fratzscher, President of the German Institute for Economic Research in Berlin: “We can see that Germany is losing its attractiveness in global competition. And that’s why we urgently need a change of course from the federal government here with a primary focus on investing in the future in this transformation.”

Economics Minister Robert Habeck actually made it a year ago – the title of his first annual economic report was: “For a social-ecological market economy. Shaping the transformation innovatively”. However, as is well known, the main focus in recent months has been on energy security. There is no real economic policy at all, according to the opposition.

Klöckner: Too much bureaucracy

The federal government is accepting the loss of competitiveness without taking countermeasures, says Julia Klöckner, economic policy spokeswoman for the Union parliamentary group. There is also not less, but more bureaucracy, for example with the price brakes for energy: “The companies that come to me usually ask when they could be unleashed, it’s not about money or more subsidies, but that they can just do. They would like to hire engineers and other professions. But they say they have to hire more and more accountants because they have to do more documentation.”

She sees it as an alarm signal that the pharmaceutical company BionTech is part of its Cancer research in England could relocate. According to Klöckner, Germany as a business location is at risk. DIW President Fratzscher first refers to the responsibility of companies:

If we should have a de-industrialization of Germany, then it will be caused by the fact that German companies oversleep the transformation towards sustainability, environmental protection, artificial intelligence, i.e. also new technologies.

Habeck also argues in this direction – he wants to trim the economy above all in the direction of climate protection: “Anyone who sticks to the old technologies, the fossil technologies, will not only have a problem because of climate protection, but also economically.”

This is also shown by the Inflation Reduction Act in the USA, a massive subsidy program with which a lot of money is flowing into the “green transformation”, as Habeck says. How Europe should react to this is still being debated. There shouldn’t be a subsidy race, says Habeck. He wants targeted subsidies for technologies without endangering trade. Rather, trade must be diversified in order to reduce dependencies on individual countries such as China. He wants to promote trade agreements as long as they contain social and ecological standards.

So, the point of free trade agreements, or trade agreements – the ‘free’ refers to neoliberal thinking – is not maximum trade, no matter what, but social goods, maintaining and increasing added value, including climate protection.

It is also not only a matter of the growth of the gross domestic product; for the second time, the annual economic report contains a chapter that is intended to evaluate other standards for measuring prosperity, such as inequality or CO2 emissions.

Economic policy – where to?

Hans-Joachim Vieweger, ARD Berlin, 25.1.2023 8:09 a.m

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