A leading economic expert from the German industry’s Institute of the German Economy (IW) in Cologne, Michael Hüther, has identified contradictions in the economic policies of the Union and warns against a U-turn in energy policy.
According to Hüther, the CDU’s 15-point program includes the reintroduction of the agricultural diesel refund, tax-free bonuses for overtime and up to 2,000 euros of tax-free income for retirees, which he considers new subsidies that should be avoided. He suggests that the next federal government should focus on three key issues in the short term: promoting investments, reducing network fees and preventing a further increase in social insurance contributions.
To promote investments, Hüther supports a premium, as proposed by the SPD, or so-called super-depreciation. “We know from research that investments can be leveraged so effectively” he said. “That’s why I don’t understand the Union’s resistance to it. Tax cuts could be promised in a second step and then the solidarity surcharge could be abolished for everyone. As it is, the companies already pay two-thirds of the solidarity surcharge.”
Regarding network fees, Hüther sees the smallest problems, as he further explained. “One could lower the fees and finance the costs through an amortization account. This would be balanced by consumers if the costs of the grid expansion stabilize.” He also believes that the social insurance contributions should be mainly addressed by the Social Democrats, as there is no more room for further cost increases. “One should declare a moratorium, freezing the contributions and then establish a reform commission to discuss solutions.”
Investments in infrastructure, according to Hüther, can also be financed through the debt ceiling by financial transactions, where the state’s contributions are offset by a corresponding asset. “The real problem, however, is the defense budget. There is already a special fund for it, which would have to increase from 100 to around 300 billion. Maybe one could make a deal with the Left, agreeing to a special fund for infrastructure in exchange for a higher defense budget” he said, possibly suggesting a deal where the Left Party agrees to a special fund for infrastructure in exchange for a higher defense budget.
Hüther also rejected the plan to reintroduce the Heating Act in its current form. “At the latest, when the emissions trading system ETS 2 also includes buildings and traffic with a uniform CO2 price from 2027, heating will become much more expensive” he said. “It is therefore not foolish to set targeted incentives for the retrofitting of heating systems – just not hasty.”
The IW expert also expressed criticism of a possible return to nuclear power. “I would warn against it” he said. “Even if one decides on it this year, it would take 20 years to have operational nuclear power plants again. I have concerns that the Union is now throwing all the balls in the air that it found – and that won’t work either.