Five months after being sworn in, Finance Minister Christian Lindner (FDP) presented a plan for his further actions.

With his strategy paper on “Fiscal Policy at a Turning Point”, he wants to strengthen economic growth and avoid inflationary impulses.

The politician urgently warns of the risk "that increased inflation expectations in companies and trade unions will influence wage and other contract negotiations and that the currently high inflation will solidify in higher inflation rates in the medium term".

As an expression of increased uncertainty, risk premiums have increased.

This puts riskier investments such as stocks and corporate bonds under pressure and narrows the entrepreneurial scope for financing.

Manfred Schäfers

Business correspondent in Berlin.

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In the strategy paper, Lindner names other factors that will dampen growth and increase inflation in the medium term.

Keywords in this context are: low productivity growth, demographic change, climate-neutral restructuring of the economy.

His answer is: "The current environment should be seen as a signal for a strengthening of supply-side economic policy." Especially since there is a risk of falling into a phase of stagflation in the event of a sharp economic downturn and unrelentingly high inflation.

Strengthen supply-side policies

So far, it was only vaguely recognizable how the FDP politician wants to differentiate himself from his predecessor Olaf Scholz (SPD), who is now in the Chancellery.

Lindner recently referred to the relief he was driving.

These include increasing the basic personal allowance and employee allowance in income tax, lowering energy taxes for drivers, taxis and freight forwarders, as well as better depreciation conditions and more generous loss carrybacks for companies.

In addition, the FDP chairman spoke more about the need for a supply-side financial policy, without giving details.

In addition, Lindner repeatedly announced the return to the debt rule in the Basic Law for the coming year - at the same time he is currently incurring more debt than any of his predecessors in order to bunker credit authorizations in the energy and climate fund and in the Bundeswehr special fund for the next few years.

With the strategy paper, which the minister will officially present this Wednesday, he wants to provide answers to key questions: Which growth policies will help at a time when supply chains are disrupted and the energy supply is suffering because Russia is heading west with its war of aggression in Ukraine sanctions?

How should fiscal policy react to increased inflation?

What adjustment screws can the state turn?

The FDP politician has not yet given any details in the paper, which he then has to negotiate with the coalition partners.

But he sets the direction in which he believes things must go.

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