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German cabinet agrees €60 billion climate investment plan

The new German government approved a €60 billion climate investment plan in a cabinet meeting on Monday, laying the first stone towards achieving its ambitious environmental targets.

Germany's Finance Minister Christian Lindner on Monday.
Germany's Finance Minister Christian Lindner on Monday. Photo: picture alliance/dpa | Kay Nietfeld

The agreement was announced by Finance Minister Christian Lindner, who celebrated a “booster” for Europe’s top economy and “the beginning of a climate-neutral and digital future for Germany”.

The investment in the new government’s “Climate and Transformation Fund”, first announced on Friday, comes from unused debts intended to tackle the coronavirus.

The government had gained the approval from the German parliament to borrow €240.2 billion this year to finance measures to lessen the impact of the pandemic on businesses but will now only need €180 billion.

Germany’s coalition government of the Social Democrats (SPD), Greens and pro-business FDP has announced ambitious plans to tackle climate change, including ending coal power and generating 80 percent of electricity from renewables by 2030.

READ ALSO: The five biggest challenges facing the German government

The fund, which builds on a previous “Climate and Energy Fund”, will hold “around €76.2 billion” after the supplementary budget measures are passed, Lindner said.

The fund would be topped up in future through the government’s budget, the new finance minister said.

Lindner stressed that the money did not amount to “new debt”, a politically controversial subject in Germany.

The coalition has promised a return to the so-called debt brake – a rule enshrined in the constitution that normally limits Germany’s public deficit to 0.35 percent of overall annual economic output – by 2023.

The debt brake was lifted to help fight the coronavirus pandemic and the coalition has used the reprieve to set money aside for green investments.

Lindner said he expected €100 billion of new debt planned by the government under the relaxed rules to be “sufficient” for 2022, but underlined the uncertainty around the economic impact of the most recent wave of the coronavirus.

The budget measures will be debated in the Bundestag lower house of parliament on Thursday.

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ITALIAN ELECTIONS

EU sees trouble but no breakdown with Italy far-right in power

The potential emergence of a far-right government in Italy has put the European Union on alert for disruptions, with fears that unity over the war in Ukraine could be jeopardised.

EU sees trouble but no breakdown with Italy far-right in power

Brothers of Italy leader Giorgia Meloni and the League’s Matteo Salvini are slated to be the big winners in Sunday’s general election on a firmly “Italians First” agenda, in which officials in Brussels largely play the role
of the bogeyman.

The biggest worries concern the economy.

Italy’s massive debt is seen as a threat to European stability if Rome turns its back on the sound financing championed by outgoing prime minister, Mario Draghi, a darling of the EU political establishment.

A victory by Meloni and Salvini would follow fast on an election in Sweden where the virulently anti-migration and eurosceptic Sweden Democrats entered a ruling coalition, just months before the Scandinavian country is due to take over the EU’s rotating presidency.

READ ALSO: Giorgia Meloni’s party will likely win the elections – but will it last?

But officials in Brussels said they would not jump to conclusions about Italy, cautiously hanging on to reassurances made by key right-wing players ahead of the vote.

Giorgia Meloni delivers speech at party rally

Brothers of Italy leader Giorgia Meloni (Rear C on stage) delivers a speech on September 23, 2022 in Naples. (Photo by Andreas SOLARO / AFP)

“This is not the first time that we risk confronting governments formed with far-right or far-left parties,” said European Commissioner Didier Reynders, a veteran of EU politics.

“Let voters choose their elected representatives. We will react to the actions of the new government and we have instruments at our disposal,” he added.

That was echoed by Commission head Ursula von der Leyen, who warned that Brussels had “tools” to deal with errant member states.

“My approach is that whatever democratic government is willing to work with us, we’re working together,” she said.

Anti-immigration League leader Matteo Salvini condemned the EU chief’s comments on Friday, calling them “squalid threats”.

READ ALSO: How would victory for Italy’s far right impact foreigners’ lives?

‘Benefit of the doubt’

Italy has huge amounts of EU money on the line. It is awaiting nearly 200 billion euros in EU cash and loans as part of the country’s massive share of the bloc’s coronavirus recovery stimulus package.

In order to secure each instalment, the government must deliver on a long list of commitments to reform and cut back spending made by previous administrations.

“To do without the billions from the recovery plan would be suicidal,” said Sebastien Maillard, director of the Jacques Delors institute.

“We will give them the benefit of the doubt,” said an EU official, who works closely with Italy on economic issues.

and right-wing parties Brothers of Italy (Fratelli d'Italia, FdI), the League (Lega) and Forza Italia at Piazza del Popolo in Rome, ahead of the September 25 general election.

(From L) Leader of Italian far-right Lega (League) party Matteo Salvini, Forza Italia leader Silvio Berlusconi, leader of Italian far-right party Brothers of Italy Giorgia Meloni, and Italian centre-right lawmaker Maurizio Lupi on stage on September 22, 2022 during a joint rally of Italy’s coalition of far-right and right-wing parties. (Photo by Alberto PIZZOLI / AFP)

“We will judge them on their programme, who will be the finance minister. The names being mentioned are people that we in Brussels are familiar with,” the official added.

READ ALSO: Political cheat sheet: Understanding the Brothers of Italy

However, when it comes to Russia, many fear that Hungarian Prime Minister Viktor Orban will find in Italy a quick ally in his quest to water down measures against Russian President Vladimir Putin.

A longtime friend of the Kremlin, Salvini has promised that he will not try to undo the EU sanctions. But many believe that his government will make the process more arduous in the coming months.

Whether the war or soaring inflation, “what we are facing in the coming months is going to be very difficult and very much test European unity”, said Fabian Zuleeg, chief executive at the European Policy Centre.

The likely election result in Italy is “not going to help in making some of these hard decisions”, he added.

READ ALSO: TIMELINE: What happens on election day and when do we get the results?

France’s European affairs minister, Laurence Boone, pointed to the headache of the far-right’s unpredictability.

“One day they are for the euro, one day they are not for the euro. One day they support Russia, one day they change their minds,” she told French radio.

“We have European institutions that work. We will work together. But it is true that it is worrying,” she added

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