MIL-OSI Translation: Federal Finance Minister Christian Lindner in an interview with WirtschaftsWoche

1

MIL OSI translation. Region: Germany/Germany –

Source: Federal Ministry of FinanceDate 01.07.2022WirtschaftsWoche: Mr. Lindner, do you sometimes longingly think back to December 2021, to the optimistic start of the traffic lights? Lindner: We cannot make the world more beautiful than it is. We are confronted with war and crises in Europe. Nobody in the government chose this situation. But it’s not time for looking back, but for action. We support the Ukraine massively, we invest hundreds of billions in our German armed forces. We are consistently opposed to inflation and the energy crisis – with everything this government can muster.WirtschaftsWoche: Nevertheless: Instead of peace, joy and progress, the government is now confronted with war, inflation and a gas freeze. How does that change the traffic light compass?Lindner: Don’t worry about our compass. One message is particularly important to me as finance minister: we must fight inflation. I’m concerned about what’s going to happen in the fall when utility bills come in. Many citizens are already afraid that they will no longer be able to finance their lives.WirtschaftsWoche: And what will follow from this?Lindner: That we should end the expansive spending policy as soon as possible so that the state doesn’t fuel prices even further. We will simply no longer be able to afford more debt because of rising interest rates. Debt service could rise from 4 to around 30 billion euros in the coming year.WirtschaftsWoche: Mainly because the federal government itself continued to issue short-dated government bonds at the end of the low-interest phase. Even every real estate buyer was drummed into securing the low interest rates for as long as possible. A fatal mistake, right? Lindner: You shouldn’t blame the finance agency, which runs the federal government’s debt management, for these decisions. It is part of the finance agency’s strategy to offer bonds of various maturities, including short maturities, so that the optimum market position is achieved. I’m more concerned about another problem.WirtschaftsWoche: That would be?Lindner: My predecessors had inflation-indexed paper issued, which used to be good business and is now an immense burden. But here, too, we must look to the future. We will comply with the debt brake again, curb the flood of government money – that’s my contribution to fighting inflation. At the same time, I insist on stimulating the forces of economic growth by reducing bureaucracy, speeding up planning processes, bringing more skilled workers into the country, and promoting free trade agreements such as the current CETA between the EU and Canada. That brings a lot and costs nothing.WirtschaftsWoche: It sounds as if there is no money for a third relief package for citizens and companies affected by inflation. Basta?Lindner: That’s not my style. On July 4th there will be talks between the federal government and social actors for a concerted action. This is certainly only the prelude to several discussions. Incidentally, I would like to point out that, apart from the fuel discount and the 9-euro ticket, the measures in the relief packages that have already been decided have not even arrived. A family of four, in which both parents work, is relieved of over 1000 euros with the EEG surcharge, child bonus and employee allowance alone. It all comes first. We should let it sink in first. But one thing is clear: New budget funds will no longer be available this year.WirtschaftsWoche: Means: But in the coming year?Lindner: There will be another relief package in 2023: The standard rates of basic security will be adjusted upwards in any case, which will help those who particularly need it. Then there will also be relief for all hard-working taxpayers in the cold progression. I am firmly convinced that the Minister of Finance should not be the beneficiary of inflation.WirtschaftsWoche: Will all income groups be relieved of the cold progression or only small and medium earners, as many SPD and Green Party politicians are demanding?Lindner: I will orientate myself on the coalition agreement – and there are no tax increases. For everyone, and that applies to every kind of tax increase.WirtschaftsWoche: The SPD and the Greens are still talking about a new emergency. The war isn’t ending any time soon, Russia’s President Vladimir Putin could turn off the gas completely, prices aren’t falling – in short: is it possible that the situation will have to be reassessed in the coming year – and the debt brake will be suspended again after all? Lindner: Again, we can no longer afford additional debt. Moderation is a requirement of the Basic Law. We have to get back to financial solidity, otherwise in a few years we would have to cut government benefits across the board or massively increase taxes. We would even endanger the AAA rating of the Federal Republic of Germany. So: Concrete, focused help and growth impulses: yes. A broad subsidy regime including takeaway festival: no. Politics cannot solve all problems with money.WirtschaftsWoche: The debt brake is in place, no matter how things are going?Lindner: I can’t answer any questions, no matter how. In June 2022 I can only say that we are presenting a constitutional budget for 2023 that contains sufficient provisions for what should be necessary.WirtschaftsWoche: Will there be even more flexibility in 2022? Federal Economics Minister Robert Habeck is already talking about a protective shield for the energy industry in order to prevent a Lehman Brothers effect there.Lindner: One should be careful with analogies in politics, so let’s stick to concrete figures. We are already stretching this protective screen. The gas storage facilities are being filled with government guarantees totaling 15 billion euros. We have secured the continued operation of Gazprom Germania with ten billion euros. I won’t speculate about anything else.WirtschaftsWoche: Is our very energy-intensive and industry-heavy economy falling on our toes?Lindner: No, I don’t want to redefine a strength into a weakness. Nevertheless, the need for change is great, but that is up to the companies and is clearly seen there. Politicians can and should support this. I have already mentioned some location measures. The overdue ratification of Ceta should now be followed by further agreements.WirtschaftsWoche: For example with the USA?Lindner: As you know, I would be open to that. There’s the transatlantic Trade and Technology Council, which is just beginning to come alive. We should advertise for more, including among our American friends.WirtschaftsWoche: Conversely, should we venture less into China?Lindner: It’s not about withdrawing from China. But the importance of the Chinese market for the German economy can also be put into perspective by the fact that other markets such as the USA, Latin America or the ASEAN countries and Africa are becoming more important. Strengthen others instead of disconnecting them.WirtschaftsWoche: A change of course in trade policy through the back door?Lindner: I am in favor of real globalization instead of the bilateralization that Germany has pursued for a very long time in the past. We have outsourced our security to the USA, we have obtained most of our energy from Russia and we supply our goods to China too one-sidedly.WirtschaftsWoche: Brittle supply chains are already leading to relocations of production. As finance minister, you should welcome that.Lindner: The companies make location decisions themselves. But if the energy costs are competitive, skilled workers are available, there is a good infrastructure, attractive taxes and fast planning and approval processes – then the economy also has good reasons to produce in Germany.WirtschaftsWoche: Don’t you expect too much at once from many critical fellow citizens, especially among the Greens?Lindner: In this situation we have to free ourselves from taboos.WirtschaftsWoche: But where are the new, more innovative proposals to deal with the challenges of this epochal turning point? Lindner: I cannot and do not want to take part in such meta-debates at the moment. My work aims to ensure that our country gets through this crisis without major damage.WirtschaftsWoche: But isn’t the extension of the nuclear power plant runtimes that you brought up also a meta-debate?Lindner: When it comes to eliminating bottlenecks in the energy supply , then I am in favor of putting all options on the table. When it comes to a systemic contribution that nuclear power plants can make to the energy security of our state – and I have indications that this is the case – then we should examine it without prejudice. The point now is not to design a long-term strategy for the year 2045. It’s about overcoming the period of scarcity for two, three or four years.WirtschaftsWoche: Shouldn’t a temporary speed limit also be discussed without taboos?Lindner: Due to the sharp rise in fuel prices, we have already seen a significant change in behavior on the streets. At least that’s what I’m observing. When it comes to fuel, we don’t have a physical shortage like there is with gas, but rather high world market prices to which everyone can react by changing their behavior. When it comes to heating, on the other hand, this is only possible to a very limited extent.WirtschaftsWoche: Should Germany also rely more on domestic sources than before, especially through fracking?Lindner: The FDP is in favor of exploring new energy sources at home as well. This applies in particular to gas and oil deposits in the North Sea, but also applies to the mainland – wherever possible. That’s just a small contribution, of course. But it can be a contribution. And in view of the completely changed price environment, the economic prospects for domestic energy are much better. I would also like to see a much broader debate about our future energy policy from WirtschaftsWoche.WirtschaftsWoche: As a friend of Freiheitsenergie, you should try to convince millions of homeowners to become solar power suppliers to make, which hitherto held back for bureaucratic and tax reasons. Would that be an option?Lindner: Indeed, we need to come up with a comprehensive plan to promote freedom energies. And that includes the question of how we can get hundreds of thousands of property owners to produce renewable energy. We should remove bureaucratic hurdles here.WirtschaftsWoche: When we talk about real estate: what can the state do to enable citizens to buy real estate in view of rising interest rates and construction costs?Lindner: The construction costs are a big problem. I am advocating that we stick to standards in moderation. We should consider how much thermal insulation we can prescribe without strangling the urgently needed housing construction.WirtschaftsWoche: And the other big problem?Lindner: Those are the ancillary construction costs. The fact that the real estate transfer tax in many federal states is now between six and six and a half percent and that the CDU is currently raising the tax rate in Saxony further exacerbates the situation. That’s why I made the suggestion that there could be a reduced real estate transfer tax rate for the federal states. This can lead to the complete abolition of the real estate transfer tax if a state parliament decides so.WirtschaftsWoche: Would the federal government step in for the states’ loss of income?Lindner: No. This is purely a state tax.WirtschaftsWoche: But why should the states participate if they have been doing exactly the opposite and are turning the tax screw up?Lindner: Because perhaps a state legislator assesses property purchases for commercial real estate buyers and large corporations differently from a tax point of view a family that wants to buy a condominium for the first time.WirtschaftsWoche: Interest rates are now rising sharply, which makes the dream of owning your own four walls more difficult. How could you help here? Lindner: In the past, for example, there were programs from the KfW Bank to secure loans and keep interest rates bearable. I think such approaches are preferable to a pure new building subsidy with the watering can. We have recently seen that such programs have led to a gigantic outflow of funds. It can’t go on like this.WirtschaftsWoche: That means?Lindner: Less direct subsidies à la Baukindergeld, but possibly support with interest rates.WirtschaftsWoche: You have a lot of construction sites and you always have to deal with rowdy partners. Do you already regret joining the traffic light coalition? Lindner: What would have been the alternative? The CSU clearly thwarted the formation of a Jamaica coalition led by Armin Laschet. And the CDU was not in a position to do so when viewed in the light of day.WirtschaftsWoche: Nevertheless, voters are currently running away from the FDP, and in the last three state elections the popularity has almost halved. Are you getting nervous? Lindner: The next federal election isn’t until 2025, and the current polls show that the FDP is at nine percent. I see that as a good starting point. Important projects such as the share pension, the acceleration of planning and improvements in digitization are still pending. And I have promised two guard rails: The debt brake in the constitution will not be relaxed and there will be no tax increases of any kind.WirtschaftsWoche: Are you sure that the coalition partners will go along with it and that this government will last until 2025?Lindner: Ban it in times of war and crisis speculation about the continued existence of the government.

MIL OSI

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

MIL Translation OSI