Germany’s ‘Debt Brake’ Stop Its Green Ambitions?



Germany Germany’s ‘Debt Brake’ Stop Its Green Ambitions? For the third time in the last 50 years, the German government is thought to be considering slowing down its climate and energy programmes to solve domestic budget problems Experts are not optimistic that the plans would please many German Green Party members If Germany switches its focus to other areas (such as border security), then the lack of energy and climate subsidies might help. Photograph: Bettmann/Bettmann Archive

Germany’s Debt Brake plan has been floated as a way to restrain spending and rein in the deficit.

But the idea, which was conceived in the 1990s, hasn’t turned out to be that popular. It hasn’t really helped Germany cut its deficit, since the budget reforms, which helped trim the deficit, came in the wake of the euro crisis. In fact, it’s had the opposite effect: At the time it was introduced, the idea was ridiculed as an excuse for Germany to pile on debt, and the deficit has only continued to grow.

Faced with no choice but to drastically slash spending in the last years of the coalition, Chancellor Angela Merkel has upped the country’s climate and renewable energy targets and, in doing so, has made the country’s finances look worse.

As well as cutting spending, Germany now has high debts. At €850bn (£700bn), it’s almost €10bn more than the GDP of the whole of the eurozone and around €100bn higher than Greece’s debts. The debt is so high that investors’ are demanding higher rates for its bonds, making the budget deficit look worse than it really is. Even Merkel herself admits that “the interest rate is also a problem. We want to find a solution.”

Merkel wants to fix that too. In Germany’s best-laid climate initiatives, she has repeatedly said that cutting energy subsidies and energy prices would be a vital part of her current energy and environment programme, getting the country’s large fossil fuel industries in line with its climate commitments. Unfortunately, these plans will cost money. As Merkel put it in March: “Much as I would like to increase our savings on climate costs – and they are a vital part of our climate policy – I still have to shoulder costs for a cleaner Germany, for a greener Germany.” In other words, her plans would increase the deficit.

That’s why many economists say that even if Merkel and the Greens finally form a coalition, the initial cuts would not satisfy any of Germany’s key climate goals. It’s why Green party members of the Bundestag have formed a group called iBoF, to examine alternative ways to reduce carbon emissions and reduce the public deficit.

But Germans are less optimistic that these proposed cuts will work. A recent study found that the Germans had less confidence in her than in the man she would have had to share power with – Angela Merkel in 2013.

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An Emnid poll found that 49% of German voters “seriously” doubt that Merkel would make good on her promises. A Pew Research poll found that 69% of German voters said that the Chancellor was not reliable on climate. And a poll last year showed that despite Germany being one of the world’s largest emitters of greenhouse gases, its citizens still see it as a bad country to visit because of its air pollution. It’s a sentiment that may not get better once spending cuts start to take shape.

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