At the expense of the debt brake
Habeck wants to keep industry in Germany with state money
October 24, 2023, 4:24 p.m
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Energy-intensive companies in particular are considering relocating production abroad due to high energy prices. Economics Minister Habeck would therefore like to invest a lot of money in order to keep industry in the country. Chancellor Scholz and the FDP are strange with some ideas. Praise comes from associations.
Federal Minister of Economics Robert Habeck is planning an industrial policy that is strongly geared towards state support and wants to loosen the debt brake to achieve this. “We want to maintain Germany as a strong industrial location in all its diversity,” explained Habeck when presenting a strategy paper from his ministry. The energy-intensive raw materials industry should also continue to be present. The industry is not only economically important, but also “makes a decisive contribution to the social cohesion of our society and also to its democratic stability,” explained Habeck. It is part of the country’s identity.
The concept paper refers to the changes, particularly due to the corona pandemic and the Russian attack on Ukraine: supply chains such as the one to China proved to be unstable, and dependencies on individual players such as Russia in energy issues were major disadvantages. “If we diversify value chains and at the same time maintain and rebuild value creation in Germany and Europe, this will make us more independent of autocracies in an increasingly uncertain world,” argues Habeck.
A lot of money must therefore be invested: for the expansion of renewable energies, the electricity grid and the hydrogen industry, the renovation of rails, bridges and roads and tax incentives for investments. The strategy also names new technologies for the capture and storage of CO2, which are viewed very critically by large parts of his own party.
Scholz has a different opinion on industrial electricity prices
In its strategy, the Ministry of Economic Affairs is once again in favor of a “bridge electricity price”: for energy-intensive companies that compete internationally, the electricity price should be subsidized by the state until electricity prices have fallen again due to sufficient production from renewable sources. The coalition partner FDP rejects this, and Chancellor Olaf Scholz is also skeptical. In a speech at an appearance at IG Metall, he emphasized that the federal government would rather try to avoid the closure of energy-intensive companies with other measures. “It will be a combination of many individual measures,” said Scholz. Habeck only recently received support from IG Metall on the issue of industrial electricity prices.
The Green politician rejects those who, in the course of the debate about this proposal, advocate not artificially keeping energy-intensive industries in Germany. According to the paper, glass, cement and paper will continue to be produced in Germany in the long term, even if the conditions for producing cheap electricity are relatively poor.
Habeck questions the debt brake
A conflict with the coalition partner FDP is also already foreseeable on the question of financing, because Habeck is questioning the debt brake, which Liberal leader Christian Lindner in particular insists on compliance with. Habeck said that the coalition agreement “including the debt brake” applies to the current legislative period. “Nevertheless, we have to think about whether the rules we gave ourselves in another time of ever-smiling globalization, friendly coexistence, cheap Russian gas are suitable for the new time. I mean, they only fit to a limited extent.”
The BDI industry association praised the Economics Minister’s “clear commitment to industry”. The pharmaceutical, electrical, digital and chemical industries also welcomed the initiative. The strategy mainly consists of “empty announcements,” criticized medium-sized business representative Christoph Ahlhaus. “We don’t need a world championship announcement, but rather an autumn of action,” he told the “Rheinische Post”.
The Cologne Institute of German Economy certified that Habeck “understands and takes seriously the concerns of companies in Germany.” “And yet the Vice Chancellor, worn down by the coalition dispute, seems to shy away from taking concrete steps.”