Government of Social Democrats, Greens and Liberals is likely to cause Stagnation in Germany and the EU

The coalition government that will be formed between the Social Democrats, the Greens and the Liberals, headed by the current Vice Chancellor and Minister of Finance, Olaf Soltz, makes it difficult for these parties to reach an agreement between the parties that increased their percentages in the September 26 elections.

Through a tough negotiation and the necessary compromises, there is a risk that they will make choices that will further contribute to the stagnation of Europe. Germany has difficulty making decisions and contributing to developments. The initiative of the formal negotiations was started by the Greens and mainly the liberals, exchanging views and recording any disagreements.

The Social Democrats are close to the Greens on many issues, but there is a big gap between the Liberals and the Greens. The Greens ‘electoral base prefers cooperation with the Social Democrats, while the Liberals’ electoral base prefers cooperation with the Christian Democrats.

The issues that disagree

The Social Democrats and the Greens:

• They want tax increases to finance the improvement of the welfare state and to promote large-scale infrastructure investments.

• They give priority to public investments.

• They support the initiative of French President Emmanuel Macron and the leaders of the South to create a European Recovery Fund to deal with the effects of the pandemic and strengthen the EU’s economic cohesion and in all forms of fiscal austerity.

The Liberals:

• They believe that a reduction in taxation is needed, believing that the gap in public investments can be filled by the private sector, as long as companies are not burdened with additional tax burdens and at the same time their existing taxation is reduced.

• They see the European Recovery Fund as something temporary that is only needed to deal with the effects of Covid-19, and can not be continued or institutionalized.

• They want a return to the rules of the Fiscal Stability Pact.

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