Traffic light government: Two summits, one paper and a coalition on the brink

The Chancellor no longer wants coalition theater. That’s why the curtain will remain closed when he discusses ways out of the economic downturn with representatives of industrial associations, unions and large companies on Tuesday at 4 p.m. There will be no press conference afterwards, and photographers and cameramen will also be denied the originally planned opening images. According to the Chancellor’s wishes, what is discussed behind closed doors in the Chancellery should not be leaked to the outside world. “We have to get away from the theater stages,” was his motto for the meeting at the weekend. His goal is “great cooperation” in the matter.

However, two actors who are not entirely unimportant to the matter remain excluded from the “great togetherness”. These are the two on whom Scholz depends most if he wants to fulfill his promise of a “new industrial policy agenda”: Economics Minister Robert Habeck from the Greens and Finance Minister Christian Lindner from the FDP – his two coalition partners.

They don’t like the fact that their head of government is going it alone and have reacted in different ways. Habeck presented an impulse paper in which he called for a billion-dollar fund for more investments. Lindner’s FDP faction quickly set up a kind of counter-summit, which took place just five hours before the meeting in the Chancellery across the street in the Reichstag building. So it’s not just about the economy, but also about the future of a coalition that is already in jeopardy.

The initial situation: recession and disagreement at the traffic lights

The second recession in a row is expected this year – Germany is lagging behind other western industrialized countries. According to forecasts, economic output is shrinking, among other things, because companies and private individuals are holding back on investments given the geopolitical situation. Habeck admitted three weeks ago that disputes at traffic lights also contribute to uncertainty. Leading economic research institutes had previously complained that there was a “significant increase in political uncertainty.” The traffic light partners pursued different political goals.

What the economy expects: Quick decisions

Business associations have long been calling for comprehensive structural reforms: lower energy prices, less bureaucracy, measures to combat the shortage of skilled workers, a reduction in social security contributions, more money for the sometimes ailing infrastructure. The traffic light coalition has announced a “growth initiative” with many measures. However, nothing has been implemented yet and some things are controversial. Business associations believe the plans are not sufficient.

Before the summit, the business associations are calling on the traffic light coalition to act quickly and uniformly. “The economic data urges us to hurry,” says Jörg Dittrich, President of the Central Association of German Crafts, who is taking part in the FDP summit. “A common, coherent and coordinated government plan is needed – not fragmented party or election campaign tactics.”

What the Chancellor wants: A “new industrial policy agenda”

The Chancellor is entering into consultations with business and trade unions without a finished concept. He wants to take his time. It is already clear that further meetings will follow. Two weeks ago, Scholz said in a government statement in the Bundestag what his goal was: a “new industrial policy agenda” with concrete measures to stimulate the economy and secure jobs. “I will suggest to this parliament that whatever comes out of this should be put into motion so that things can move forward in Germany,” he promised.

At the summit, Scholz is focusing on sectors in which a particularly large number of jobs are at stake. In addition to the Federal Association of German Industry (BDI), the Association of German Mechanical and Plant Engineering (VDMA) will be there. The employees are represented by the German Federation of Trade Unions (DGB), IG Metall and IG Mining, Chemistry and Energy. In addition to VW, BMW and Mercedes are also expected to be among the major companies.

What Lindner and the FDP want: reforms for everyone

For the FDP, the Chancellor’s approach falls short. “The German economy is not just industry, it is also medium-sized businesses, crafts and freelance professions,” says Lindner. The FDP therefore invited the latter separately to the Reichstag building. She doesn’t just want to focus on the industry. “We want structural reforms that help everyone,” says parliamentary group deputy Christoph Meyer of the Funke media group.

What Habeck wants: billion-dollar funds for investments

Habeck did not call his own economic conference in response to the Chancellor’s summit, but he did make a substantive proposal. He wants to set up a fund that will reimburse companies ten percent of their investments and that will be financed through debt. Habeck has not yet wanted to commit to a financial scope. “I intentionally didn’t calculate any volume,” he said when presenting his proposal. However, the BDI has calculated that a “mid three-digit billion figure” will be necessary for the next few years.

What can come out of it in the end is anyone’s guess

Only one thing is certain: in order to achieve any result, Scholz, Habeck and Lindner would have to pull themselves together again. And whether that is still possible is questionable. In any case, nothing will happen before the budget showdown in the Bundestag. The budget committee’s adjustment meeting is on November 14th. If the coalition doesn’t agree on how it wants to close the remaining gaps, it will be on the brink of disaster anyway.