The Brief — Germany’s economic consensus shifts to the left –

German economic thinking has long had a reputation for being conservative. Austerity, debt reduction and fiscal discipline are the buzzwords that many Europeans associate with Germany. However, the consensus of German economists has shifted increasingly to the left of late.

A typical example is today’s report from the so-called “five wizards of economics” – or Wirtschaftsweisen– a body of experts that advises the German government on all economic matters. The body is traditionally considered a beacon of conservative economic thought and has been frequently criticized for its neoliberal line of thinking.

However, in today’s report, they were surprisingly progressive.

The recommendation currently making the most waves in Germany is their call to raise taxes on the wealthy to fund the current crisis – a stance that has drawn much outcry from the centre-right.

CDU politician Gitta Connemann, for example, claimed in the German newspaper Handelsblatt that the plans were “unrealistic and toxic”.

Experts also attacked plans – by the government and in particular the liberal FDP party – to adjust the tax system to inflation in order to relieve citizens of higher tax rates and proposed a more flexible approach to reform EU debt rules.

While the position of Wirtschaftsweisen does not encapsulate the whole of German economic discourse, their reversal when it comes to these economic policy topics is indicative of a broader shift that is taking place.

The liberal FDP, which generally has nothing but praise for the economic assessment of the body of experts, has found itself under serious pressure to react to recommendations that run counter to almost everything the FDP stands for.

And indeed, shortly after the report was released, the FDP made it clear that it would not authorize any additional taxes in any form.

“The position of the FDP is clear: we will not charge extra. This is how we agreed in the coalition agreement,” party deputy chairman Johannes Vogel told RedaktionsNetzwerk Deutschland (RND).

When Liberal Finance Minister Christian Lindner appeared before reporters today, the first topic he broached was not the proposed reform of EU debt rules which has been published today, but its response to the Wirtschaftsweisen – another sign of the importance of their opinion for the national political discourse.

He tried to discredit their proposals and made it clear that the government would not introduce the additional taxes for high-income earners as demanded by the experts.

However, it seems that the tides of the German expert community have changed as the liberal and conservative parties are now trying to refute their own economic consensus while the Greens and the SPD are gaining support from the (traditionally conservative) expert community. ).

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The roundup

A Franco-German proposal for a new framework for dialogue between Kosovo and Serbia, obtained by EURACTIV, indirectly reveals, from interpretations of the text, the lack of synergy existing between the two parties to resolve the problem.

The European Commission on Wednesday presented its proposals for reforming national government debt and spending rules in the form of individual plans for each EU country, negotiated between national governments and the Commission.

The European Commission on Wednesday released details of an €18 billion economic support package to help Ukraine until 2023, which it hopes will soon be approved by EU member states. .

Longstanding criticism that Microsoft has set unfair terms for running software services, like Windows, on competitors’ cloud infrastructure could lead to an EU antitrust review following a new complaint.

At COP27 in Egypt, German Chancellor Olaf Scholz announced additional funding for the government’s global hydrogen financing instrument, H2Global, to facilitate the ramp-up of the global market.

In order to achieve its 2050 climate neutrality targets, Europe must quickly crack down on fluorinated gases, a super-heating gas used mainly in air conditioning and refrigeration but also in green technologies such as heat pumps. .

The European Commission on Wednesday signed an amendment to its initial contract with Pfizer-BioNTech after several weeks of discussions to help member states better manage their vaccine needs.

On Tuesday, left-leaning MPs in France’s National Assembly questioned the legitimacy of Energy Transition Minister Agnès Pannier-Runacher after she was accused of a conflict of interest by a journalistic investigation.

EU officials have been ordered not to hold meetings with their British counterparts unless they are strictly related to the war in Ukraine or are “legally required”.

Georgia prosecutors announced on Wednesday they had raided call centers as part of a major international investigation into a criminal gang that scammed EU citizens out of millions of euros.

Republicans made modest gains in the U.S. midterm elections, but Democrats did better than expected, leaving control of Congress and the future of President Biden’s agenda uncertain Wednesday morning.

Finally, don’t miss the latest Green Brief: the Franco-German fight against hydrogen is toxic for the EU, and the Health Brief.

Pay attention to…

  • Commission President Ursula von der Leyen travels to Moldova to meet President Maia Sandu.
  • Financial Stability Commissioner Mairead McGuinness speaks at the annual meeting of EU members of the American Chamber of Commerce to the EU.
  • Economy Commissioner Paolo Gentiloni meets Stéphane Dion, Canada’s Special Envoy to the European Union.
  • European Parliament plenary debate on the common level of cybersecurity in the EU.

The views are those of the author.

[Edited by Zoran Radosavljevic]

James R. Rhodes