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Germany to cut green spending to meet budget rules

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German Chancellor Olaf Scholz has announced that his coalition reached an agreement on the budget following a month of crisis talks. The decision comes after Germany’s constitutional court declared next year’s budget illegal for violating laws on new borrowing. The government plans to adhere to low deficit commitments by cutting certain green subsidies, including ending solar energy and electric car subsidies earlier than initially planned.

Last month, the constitutional court ruled that the 2024 budget violated a clause prohibiting Germany from running a deficit exceeding 0.35% of GDP. Although the deficit was a small portion of total spending, around €17bn or 3.8% of the €450bn budget, negotiations to address the gap were challenging. The coalition parties disagreed on whether to cut spending or suspend debt rules for the fifth consecutive year.

Ultimately, the coalition agreed to reduce subsidies for green energy, construction, and transportation spending. Chancellor Scholz emphasized that the government remains committed to its environmental goals but acknowledged the need to achieve them with reduced funding. The cuts will accelerate the phase-out of subsidies for electric car purchases and solar energy infrastructure, as well as change the funding structure for Germany’s railways.

Reduced spending on the electrical grid will lead to higher electricity costs for consumers. However, approximately €3bn in subsidies to polluting industries will be cut, and the carbon emission prices for companies will increase, partially offsetting the environmental cutbacks.

While the German government, a major supporter of Ukraine in Europe, assured that support for Ukraine would remain unaffected, it will send about €8bn in aid next year. All three coalition parties claimed victories in the spending agreement, with the Social Democrats limiting cuts to the welfare state, the Free Democrats preventing new borrowing, and the Greens asserting that core environmental aims are maintained despite some rolled-back schemes.

Germany’s political culture strongly opposes debt and deficits, with an aversion to high spending. However, some economists argue that this aversion has resulted in persistent underinvestment in crucial infrastructure. Despite this, Germany has one of the lowest public debts among major developed countries.

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Bavaria election: Toxic campaign heralds big vote for Germany’s populists

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In Germany’s largest state, Bavaria, voters recently participated in a contentious parliamentary election marked by a toxic atmosphere and the rise of populist forces. The far-right Alternative für Deutschland (AfD) aimed for a strong showing but faced accusations of manipulating the truth for political gain, while claiming to be victims of physical attacks and threats.

Tino Chrupalla, an AfD co-leader, was hospitalized after an incident during an election rally, which the party described as a “physical attack,” though police found no evidence of poisoning. Alice Weidel, another AfD co-leader, was placed in a safe house by Swiss police due to security concerns, even though she was on holiday abroad at the time.

On the other side, the Bavarian Greens faced hostility from right-wing factions, including physical attacks on their co-leader Katharina Schulze. Bavaria, once a tranquil and conservative stronghold, is experiencing turmoil as it grapples with various crises, including the Ukrainian refugee influx and the transition to renewable energy.

Despite these challenges, the government has managed to avert economic catastrophe, but public sentiment remains gloomy. The political landscape in Bavaria is increasingly polarized, with right-wing populists gaining traction by opposing climate reforms and presenting themselves as victims of persecution.

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European outcry forces US economist to drop top job

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Fiona Scott Morton, a highly qualified American economist, has decided not to take up the position of Chief Competition Economist in the European Commission following widespread criticism of her appointment. The strongest objections came from France, with President Emmanuel Macron expressing doubts and questioning whether there were no qualified European candidates for the role. Scott Morton, a Yale University economics professor, has an impressive background, including working in the US justice department’s antitrust department during the Obama presidency. However, she has also worked as a consultant for major tech companies like Apple, Microsoft, and Amazon, which raised concerns given that her job would involve regulating these digital giants.

EU antitrust chief Margrethe Vestager defended the appointment, highlighting Scott Morton’s corporate experience as an asset. Nevertheless, Scott Morton made the decision not to take up the post due to the political controversy surrounding her appointment and the importance of having the full support of the EU’s competition directorate. Opposition to her appointment came from various quarters, including President Macron and several Commission colleagues, as well as the four largest political blocs in the European Parliament. However, after discussions with Scott Morton, some concerns were addressed, and Philippe Lamberts of the Greens expressed support for her.

Critics argued that the criticism of Scott Morton’s appointment was unjustified since her role would primarily involve overseeing economic evidence in competition enforcement rather than favoring specific competitors. Nobel Prize-winning economist Jean Tirole praised her qualifications and stated that the European Commission was fortunate to have attracted someone of her caliber. Margrethe Vestager emphasized that the suggestion of bias based on nationality was questionable and clarified that Scott Morton would only need to recuse herself from a few cases.

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Austria: People’s Party joins hand with Greens to form unusual coalition

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The conservative People’s Party has joined hand with the leftist Greens in Austria to form an unusual coalition.

The People’s Party had been a partner of the far-right Freedom Party until it was toppled by a scandal.

In the recent snap election, the People’s Party emerged victorious.

The decision of the conservative faction to reach an agreement with the leftist has come as a surprise.

It is the first time the leftist has gotten an opportunity to become a part of the government.

Many have expressed their concerns about the sustainability of the coalition.

If securing borders is the main concern of the conservative faction, preventing climate change is the concern of the leftist faction.

In a statement released by a member of the sensational coalition government, it is said that both the climate and border concerns would be addressed by the new government.


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Green parties make huge gains in Swiss election

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The two main Green parties have made huge gains in the latest Switzerland election, by winning at least 20 per cent of the total votes that were casted in the election.

The counting process is still progressing.

As per a latest update, the SVP is still in the top position. The report says the Socialists and the Liberals have retained to the second and third positions respectively.

Yet, the notable fact is that all the aforesaid parties have lost their vote shares considerably. The SVP, the party which has been dominating the Swiss politics for several years, even has lost more than three per cent. The other parties have also suffered similar serious losses.

Though there is no change in the positions from the first to the third, there is a huge change in the case of the fourth position.

The Christian Democrats, which was one of the four major parties in the Swiss coalition government, have been pushed away, and its position has been grabbed by the Greens.

If the things progress this way, the Greens for the first time will get a seat in the coalition government this time.

Climate change was the main issue that was discussed during the election campaign.

It seems that the discussion of the climate change during the campaign has worked hugely in favour of the Greens.

The preliminary indication of the result is that the anti-immigration rhetoric of the SVP has not been received well by the voters of Switzerland.


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