General debate in the Bundestag: Chancellor Scholz calls for "concerted action" against high inflation

Chancellor Olaf Scholz (SPD) wants to work with employees and employers to discuss solutions for dealing with the current price increase.

He wanted to call both sides to a "concerted action", explained Scholz on Wednesday in the general debate on the 2022 budget. "Together with the social partners, we want to discuss how we are dealing with the current price development," said Scholz.

This is an “unusual step”, but one that is urgently required in view of the current situation.

It is about a "specific effort in an extraordinary situation," explained the Chancellor.

The term "concerted action" is known from the times of the first grand coalition.

In view of the first economic crisis in the Federal Republic, Economics Minister Karl Schiller (SPD) called together representatives from the government, the Bundesbank, business associations and trade unions in 1967.

"Concerted" means "arranged" - that is, the attempt to voluntarily coordinate and reconcile interests.

Federal President Horst Köhler also called for such an action during the financial crisis in 2008.

At that time, the incumbent Chancellor Angela Merkel (CDU) sought advice in a large group and invited business, trade unions and banks to the Chancellery.

Scholz made it clear that this coordination process should not be "permanent" and that there would be no wage negotiations.

In Germany, however, the social partners and the state have a “long tradition of working closely together for the common good in such situations”.

The problem of rising prices has not been solved, said the Chancellor.

"By the way, pensioners also benefit from the relief packages"

He cited the "Russia-initiated" war in Ukraine as the main cause, which is fueling energy and commodity prices.

The price increases are still due to “one-off shocks”.

Scholz warned of a "permanent development with inflation rates that are too high".

He also made it clear that state aid could not be paid out indefinitely.

"In everything we do today and in the future, one thing is clear: long-term subsidies financed by credit are not a solution - especially since we want to comply with the constitutionally prescribed debt brake again next year," emphasized Scholz.

The aim must be to “sustainably reduce inflationary pressure”.

Scholz previously rejected allegations that pensioners were being neglected as part of the relief measures against high energy prices.

"By the way, pensioners also benefit from the relief packages, electricity bills, the fuel discount and the 9-euro ticket," he said in the debate on the 2022 budget, which is traditionally a debate on government policy as a whole.

In addition, pensions on July 1 rose more than they had in decades.

The pension level will not fall below 48 percent in the future either.

"This is an important achievement by this government," said Scholz.

There had previously been criticism because an energy price flat rate of 300 euros should only be paid to employed persons who are subject to income tax - pensioners, students and trainees therefore received nothing.

Union parliamentary group leader Friedrich Merz welcomed the agreement with the governing coalition on the 100 billion euro special fund for the Bundeswehr.

"You have fully complied with our wishes," said the opposition leader to the SPD, Greens and FDP.

General debate the highlight of the budget week

The money will only be used for the Bundeswehr, as requested by the Union.

In addition, the armament projects would be laid down in an economic plan.

For the first time, the Bundeswehr will receive a financing law that makes it clear that Germany will also meet its obligations to NATO once the special fund has been exhausted.

"And that can also be more than two percent of the gross domestic product," said Merz.

At the same time, the opposition leader sharply attacked the chancellor, who in his speech promised Ukraine the delivery of a modern weapons system. 

As the highlight of the budget week in the Bundestag, the general debate began in the morning.

When the chancellery budget is debated, the government and opposition traditionally exchange blows on current issues.

As chairman of the largest opposition faction, Friedrich Merz opened the debate.

After him it was Scholz's turn.

All other group leaders also wanted to take the floor.

The dominating topic of the four-hour general debate is the Ukraine war and its consequences.

This also includes high inflation, especially the huge increase in energy prices, and the question of how the government is reacting to this.