According to Christian Lindner, inflation is more persistent than assumed. The Minister of Finance appealed to the traffic light: “Political priorities must be set now.”
According to Finance Minister Christian Lindner (FDP), the Germans must be prepared for further increases in prices. “Inflation is a tough beast,” said Lindner on Monday at the annual reception of the Association of German Banks (BdB) in Berlin.
It is all the more important to keep inflation rates down, both through decisive action by the central banks and through corresponding policies on the part of the states. “Fiscal policy must not counteract monetary policy,” said Lindner, also alluding to the desire for more state spending and the debate about the federal budget for 2024, which has not yet been outlined.
Monetary policy means the room for maneuver of the European Central Bank (ECB). It can tighten the money in circulation through higher interest rates and the sale of government bonds and thus counteract inflation. Fiscal policy, on the other hand, describes state spending. The following applies here: If the state keeps its money together and distributes it less to the citizens – for example through state subsidies – this can also have an inflation-dampening effect.
Coalition continues to argue about state budget
The reason: If private households have less money, companies can no longer push through higher prices so easily – because they are running out of customers.
In view of this logic, the preparation of the state budget for 2024, which the traffic light coalition has been arguing about for weeks, is now a real test, according to Lindner. “Political priorities must be set now,” the finance minister continued in his speech.
Lindner rejects Union plan for higher taxes
At the same time, Lindner once again rejected calls for higher taxes: “An increase in the tax burden would be an attack on our country’s economic recovery.”
He also thinks the new idea from the Union of raising the top tax rate for the very rich in order to relieve the middle class is wrong: “Anyone who thinks they can flatten the middle class by raising the top tax rate has to accept that from a taxable income of 80,000 euros per year, the top tax rate would have to be 57 percent.”
For comparison: Currently, the maximum tax rate, the so-called wealth tax, of 45 percent only comes into effect from an income of 277,826 euros per year.
Embed
No risk for German banks
Another dominant topic of the evening was concerns about the stability of the banks and the financial system. Here Lindner emphasized that there is no systemic crisis in Germany, but only problems at individual institutes abroad.
The President of the Banking Association, Christian Sewing, who is also the head of Deutsche Bank, said the latest concerns about the bankruptcy of the Silicon Valley Bank in the USA were unfounded. There are no parallels between the problems of the American regional banks as well as the Swiss Credit Suisse and German or European institutes. The local banks have long-term viable business models.
