Energy crisis: dispute between the federal and state governments about the implementation of the relief package

In the debate about the implementation of the new relief to cushion high prices, there is a crunch between the federal government and the states. SPD General Secretary Kevin Kühnert accused Bavarian Prime Minister Markus Söder of “political games”. The German Association of Towns and Municipalities (DStGB) called on the federal and state governments to pull together in the crisis.

Criticism has come from the federal states about the distribution of the costs of the relief measures agreed by the traffic light between the federal and state governments. Individual states are threatening blockades in the Bundesrat.

In view of the foreseeable burdens on the economy and consumers, Lower Saxony’s Prime Minister Stephan Weil (SPD) is pressing for a quick decision on suspending the debt brake. The Bavarian Prime Minister Markus Söder (CSU) calls for a “major financial solution”. Federal Finance Minister Christian Lindner (FDP) wants to stick to the debt brake, which he reserves the right to suspend again as an “ultima ratio”.

What will happen to the debt brake?

On September 28, the Prime Ministers of the federal states will meet with Chancellor Olaf Scholz to discuss the energy crisis. The traffic light coalition has decided on a relief package worth 65 billion euros, in which the federal states should also participate.

The debt brake anchored in the Basic Law stipulates that the budgets of the federal and state governments are to be balanced without income from loans. There is, however, a leeway that for the federal government amounts to a maximum of 0.35 percent of gross domestic product. In the event of natural disasters or other emergency situations, the debt brake can be suspended, which happened in 2020 and 2021 because of the corona pandemic.

SPD General Secretary Kühnert told the “Rheinische Post”: “While people in Germany urgently need the relief from the federal government to reach them, Markus Söder is playing political games.” He is taking a whole relief package hostage for his private feud with the traffic light. “This is political megalomania at the expense of millions of people in Bavaria and the whole country. Germany now has no time for the whims of a CSU man who looked too deep into a glass at the Oktoberfest.”

Kühnert went on to say that of course there are financial and technical issues to be discussed in the implementation of the relief between the federal and state governments. That is why Chancellor Scholz invited to the meeting with the prime ministers.

Söder: “The federal government should be honest”

Söder told the “Augsburger Allgemeine”: “The federal government should be honest: while the federal states’ hands are tied by the debt brake, the federal finance minister is handling gigantic billions in shadow budgets.” He emphasized: “We are in an economic crisis that is bigger than Corona, which is why a big solution is now needed in terms of financial policy – and not just small cutlery.” In an interview with the German Press Agency, Weil spoke of an emergency.

FDP General Secretary Bijan Djir-Sarai countered the criticism from the federal states and took them to task. He told the “Rheinische Post” (Monday): “It cannot be that the federal states only make demands, but then duck away when it comes to implementation.”

The general manager of the German Association of Towns and Municipalities, Gerd Landsberg, called for early coordination between the federal and state governments. “Successful crisis management can only be achieved together,” said Landsberg of the “Rheinische Post” (Monday). “This is particularly true when the federal government is dependent on the approval of the federal states and implementation by the municipalities.”