Finance Minister Wolfgang Schaeuble said Germany would not take on new debt next year for the first time since 1969, underlining the robustness of the country’s finances as European partners urge it to do more to boost euro zone growth.
Speaking to the lower house of parliament on Tuesday, Schaeuble said budgets that did not include net new borrowing should become the new norm for Germany from 2015 and said Berlin wanted to open the door for more private investment, especially in infrastructure.
“We need private investment above everything else to maintain the economic performance and competitiveness of Germany and Europe,” he said, adding that Germany needed to look into new types of public-private partnerships.
Struggling euro zone peers including Italy and France have piled pressure on Germany to boost public investment and cut taxes to jump-start the euro zone’s flagging economic recovery. Christine Lagarde, head of the International Monetary Fund (IMF), has also urged Germany to increase investment.
Earlier this month Schaeuble said “too many” of his European Union colleagues believed an investment shortfall in the region should be corrected with public investments.
In Tuesday’s speech he focused instead on private investment, saying user-financed projects would be a good idea: “Why should what has worked well, all in all, with the telecoms and energy sectors not also work with the transport sector, especially as other nations have done this?”
Germany is in dire need of investment itself, with total annual investment levels of around 17 percent of GDP – below the average of over 21 percent in other industrialized countries. The media is full of reports about closed bridges and damaged roads causing delays to businesses.
The opposition Greens and Left parties attacked Schaeuble’s budget for failing to address the problem of dwindling infrastructure spending.
“The dilapidated infrastructure is a threat to the economy,” said Dietmar Bartsch, a leader of the opposition Left party.
“You’re doing far too little for the infrastructure.”
The country has the wherewithal to invest more – it posted its biggest budget surplus since reunification in the first half of 2014 and in its latest auctions of 6- and 12-month debt, investors effectively paid to park their cash with the government.
Schaeuble said the government wanted to examine ways to get insurance companies and pension funds to invest in the financing of infrastructure projects.
“We’re looking to see how regulations might be needlessly blocking the investment possibilities,” Schaeuble said.
He said that the state would set up solid framework conditions for private investment – in particular in education as well as in science and research.
Schaeuble also said he wanted to present proposals with his French counterpart Michel Sapin at the end of the week on how to improve the framework for investment.