German minister calls for more funds for businesses as debt debate heats up

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German Economy and Climate Minister Robert Habeck speaks during a news conference in Duesseldorf, Germany February 22, 2022. Roberto Pfeil/Pool via REUTERS/File Photo

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BERLIN, Sept 22 (Reuters) – Germany’s economy minister on Thursday called for more public funds to support businesses as debate intensifies over whether Berlin should suspend its debt brake l ‘next year.

Germany suspended its deficit limit of 0.35% of gross domestic product 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 funds were needed.

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

He said the ability of German business and industry to invest was a bit worrying given high energy prices, adding that replacing Russian energy imports would cost Europe’s largest economy some 60 billion. euros ($59 billion) in 2022 and 100 billion next year.

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

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

Earlier on Thursday, Finance Minister Christian Lindner defended his position by sticking to his plan to return to the country’s constitutional debt brake next year – even if it is a solitary position.

“Based on the current state of things, it’s not only possible but also imperative,” Lindner told an insurance industry conference.

However, he said a further suspension of borrowing limits could be a “last resort” in the event of an unforeseen and catastrophic development.

Germany shouldn’t make it a norm, Lindner said, adding “even if it makes me feel a bit more alone”.

Lindner has previously said planned relief measures are possible under existing fiscal plans for 2022 and 2023, with inflation boosting tax revenue. Read more

However, government costs are increasing given the explosion in energy prices.

($1 = 1.0120 euros)

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Reporting by Riham Alkousaa Klaus Lauer and Christian Kraemer; Written by Rachel More and Riham Alkousaa; Editing by Alex Richardson and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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