BERLIN: The new German government faced its first major roadblock on Thursday after its constituent parties failed to defuse an internal row over whether to reduce electricity prices for individual consumers.
Despite holding a meeting for more than five hours late into Wednesday evening, the conservative CDU/CSU alliance and the centre-left Social Democrats (SPD) failed to come to an agreement on the issue.
In their coalition agreement, signed just two months ago, the parties had committed to lowering a tax on electricity “for all” to ease the spike in energy prices seen after the start of Russia’s full-scale invasion of Ukraine.
However, last week the government announced that the tax would only be reduced for heavy industry and the agricultural and forestry sectors.
The Bild tabloid had urged the coalition parties to “keep your promises” before Wednesday’s meeting and the issue has provoked open unease among government lawmakers.
But CDU Chancellor Friedrich Merz and SPD finance minister Lars Klingbeil have justified the decision by pointing to budget constraints.
The cost of lowering the tax more broadly is estimated at 5.4 billion euros ($6.4 billion) for next year and the two parties have not been able to agree on savings elsewhere to fund this.
SPD Labour Minister Barbel Bas said on Thursday it was necessary “to set priorities”, telling the ARD TV station: “It is important as a first step to secure jobs, boost the economy and then see what room for manouevre we have.”
While Merz’s government plans to take out hundreds of billions of euros (dollars) in new debt, this will be spent on modernising Germany’s infrastructure and armed forces and not for other budget measures such as tax cuts.
The current row raises the spectre of the recurrent arguments over spending that eventually brought down the previous government, an unwieldy three-party coalition under SPD chancellor Olaf Scholz.
The fall of Scholz’s government in November prompted an early general election in February, won by the CDU/CSU. – AFP
