(Bloomberg) -- Divisions within Chancellor Angela Merkel's ruling coalition were laid bare Tuesday when top officials disagreed publicly about the need for a stimulus package to offset potential economic damage from the coronavirus.
Ralph Brinkhaus, the head of Merkel's parliamentary caucus, said it's “much too soon to talk about a crisis” and warned against talking down the economy. That came just hours after Alexander Dobrindt, the deputy caucus leader and a member of the Bavarian branch of Merkel's bloc, proposed using Germany's budget surplus to fund a stimulus package.
“We have to be in a position to act, for example on the issue of cash for short-term work” in case factories are forced to halt because of disruptions to supply chains, Brinkhaus told reporters in Berlin before a meeting of the CDU/CSU caucus. “It's much too soon to talk about being in a crisis. You can talk such crises into happening. We have a strong economy in Germany, and we're counting on it.”
The comments added to the sense of confusion about the government's response to the coronavirus, which threatens Germany's export-reliant economy at a time when it's already mired in a manufacturing slump. Discussions around a boost in spending have gathered pace in recent months after Germany narrowly avoided recession last year.
Finance Minister Olaf Scholz, a member of Merkel's Social Democratic coalition partners, has resisted calls for a spending boost, while saying the money is there if needed. Economy Minister Peter Altmaier, a member of the chancellor's CDU party, on Monday reiterated that he wants to discuss stimulus measures with Scholz, including possible corporate tax relief.
Read more: The Plot to Scrap Germany's Balanced Budgets Has Already Begun
Dobrindt raised the prospect of making as much as 50 billion euros ($56 billion) available this year and said measures will be discussed this Sunday by the ruling coalition. He backed Scholz in ruling out a loosening of rules that limit government borrowing.
Rolf Muetzenich, the head of the SPD caucus, suggested bringing forward the abolition of a levy to help fund the rebuilding of the former Communist eastern states, the so-called “Solidarity Tax.”
“That's a simple measure and could offset any dip that we'll have in growth,” he told reporters, repeating SPD demands for a significant increase in spending.
“We want very strong investment that on the one hand has an impact on the economy, but especially puts the regions and the local authorities in a position to invest,” he said.
To contact the reporters on this story: Arne Delfs in Berlin at adelfs@bloomberg.net;Iain Rogers in Berlin at irogers11@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Chris Reiter
©2020 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
