Germany's Scholz Summons Top Ministers over Rival Plans to Fix Economy

FILE PHOTO: German Chancellor Olaf Scholz attends a press conference in Brussels, Belgium October 17, 2024. REUTERS/Johanna Geron/File Photo

German Chancellor Olaf Scholz will hold meetings with his top two ministers to try to find common ground after they put forward contradictory plans to fix the nation's ailing economy, a government source told Reuters on Sunday.
A document leaked by Christian Lindner's finance ministry raised eyebrows in Berlin last week, with its push for tax cuts and fiscal discipline widely interpreted as a challenge to the multibillion-euro investment plan put forward by Economy Minister Robert Habeck just days earlier.
The stand-off is the latest escalation in a row over economic and industrial policy between the FDP, the Greens and Scholz's Social Democrats that has fuelled speculation of the coalition's potential collapse, less than a year before elections are due.
But a government source told Reuters that Scholz and the ministers would hold several meetings in the coming days, saying that "now that everyone has submitted their paper, we have to see how they fit with each other."
A worsening business outlook in Europe's largest economy has widened divisions in Scholz's ideologically disparate coalition over policy measures to drive growth, protect industrial jobs, and reinforce Germany’s position as a global industrial hub.
While Habeck wants the creation of a fund to stimulate investment and to get around Germany's strict fiscal spending rules, Lindner advocates tax cuts to spur the economy and an immediate halt on all new regulation.
SPD leader Lars Klingbeil signalled openness to discussing Lindner's proposals in a local newspaper interview, but said that some of them were untenable for his party, which released its own economic plan earlier in October.
"Giving more to the rich, letting employees work longer and sending them into retirement later - it will come as no surprise to anyone that we think this is the wrong approach," Klingbeil told the Augsburger Allgemeine newspaper.