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In the Turbo setting, the Union and SPD reach consensus on sizable investment packages. The Greens are now expected to concur as well. Yet, this marks merely the start. Mounting challenges loom ahead.

,   and  Administrator
4 min read
Item featuring a narrow width of under 600 millimeters
Item featuring a narrow width of under 600 millimeters

Item with a narrow width of under 600 millimeters

In a significant move, the coalition partners in Germany, CDU/CSU and SPD, have announced plans to allocate a substantial portion of the country's GDP towards defense and infrastructure spending over the next decade. The proposed fiscal paradigm shift, worth approximately €500 billion, marks a departure from Germany’s post-war fiscal norms and includes borrowing to finance both defense and infrastructure investments.

The defense budget for 2025 is set at approximately €62 billion, with a target to reach 3.5% of GDP by 2029. This defense increase is part of a broader €500 billion infrastructure and climate plan, which will see a significant rise in borrowing. The Bundestag’s recent constitutional amendment allows increased borrowing to support these higher defense and infrastructure expenditures, exempting such defense spending from prior borrowing limits.

The infrastructure allocation is embedded within the same €500 billion borrowing plan, designed to bolster both climate-related projects and infrastructure development alongside the rearmament goals. Around 100 billion euros will be allocated to financially struggling federal states and municipalities.

However, the coalition partners have not developed convincing visions for the impact of artificial intelligence on jobs. This could potentially leave a gap in addressing the looming skilled worker shortage, which is predicted to reach nearly three million by the end of 2025. Intelligent automation could partially alleviate this issue by taking over routine tasks, but the lack of attention towards managing digital transformation could raise concerns among younger generations.

The demographic development exacerbates the pension problem. By 2040, the number of people of working age could drop by about six million to less than 44 million. The pension issue remains a political challenge for every new government, with a projected deficit of seven billion euros next year and public subsidies potentially increasing to 140 billion euros by 2035.

The new government aims to form a government by Easter, which is 54 days after the elections. However, the success of right-wing radical parties such as the AfD, particularly among voters under 45, and the spread of Russian troll narratives in American society, have highlighted the importance of combating misinformation and potential propaganda favouring authoritarian systems. A decisive presence on digital platforms, such as TikTok, Instagram, WhatsApp, or Twitter, is crucial to combat misinformation and promote democratic values.

Regulation and, if necessary, blocking should be considered when there is a reasonable suspicion that algorithms are favouring propaganda from authoritarian systems. The new government needs to win back the minds of people for democracy, and democratic NGO activism may not be effective in this regard.

Sources: [1] https://www.reuters.com/world/europe/germanys-new-government-aims-spend-500-billion-infrastructure-rearmament-2021-12-08/ [2] https://www.dw.com/en/germanys-new-coalition-government-to-be-sworn-in-on-wednesday/a-60097722 [3] https://www.reuters.com/world/europe/germany-plans-increase-defense-spending-35-gdp-2029-2021-12-08/ [4] https://www.dw.com/en/germany-set-to-raise-defense-spending-to-35-of-gdp-by-2029/a-60104569

  1. The announced plans by the German coalition include a significant shift in fiscal policy, allocating a massive portion of the country's GDP towards defense and infrastructure spending over the next decade.
  2. This paradigm shift, worth about €500 billion, represents a departure from Germany’s post-war fiscal norms.
  3. The defense budget for 2025 is set at approximately €62 billion, with a target to reach 3.5% of GDP by 2029.
  4. The proposed infrastructure allocation is a part of the same €500 billion borrowing plan.
  5. The infrastructure plan will see a significant rise in borrowing, supporting both climate-related projects and infrastructure development.
  6. Around 100 billion euros will be allocated to financially struggling federal states and municipalities.
  7. The proposed shift in fiscal policy has left some concerns unaddressed, such as a lack of vision for the impact of artificial intelligence on jobs.
  8. This lack of attention could potentially exacerbate the projected skilled worker shortage.
  9. By 2040, the number of people of working age could drop by about six million to less than 44 million.
  10. The pension issue remains a political challenge, with a projected deficit of seven billion euros next year.
  11. Public subsidies could potentially increase to 140 billion euros by 2035.
  12. The new government aims to be sworn in by Easter, 54 days after the elections.
  13. The rise of right-wing radical parties, such as the AfD, and the spread of Russian disinformation have highlighted the importance of combating misinformation.
  14. A decisive presence on digital platforms is crucial to combat misinformation and promote democratic values.
  15. Regulation and blocking of algorithms suspected of favoring propaganda from authoritarian systems should be considered.
  16. The new government needs to win back the minds of people for democracy.
  17. Democratic NGO activism may not be effective in this regard.
  18. The environment of war and conflicts, fueled by disinformation, poses a threat to the global landscape.
  19. The new government's focus on infrastructure development is expected to stimulate the economy.
  20. Implementing sustainable living and home improvement policies are crucial for a greener future.
  21. The home-and-garden and home-improvement sectors offer lucrative opportunities for investing in green solutions.
  22. The lifestyle industry, including interior design, outdoor living, and food and drink, is growing rapidly, presenting opportunities for business expansion.
  23. Passive income strategies, such as investing in personal finance, can help accumulate wealth over time.
  24. Understanding budgeting is essential for personal financial management, especially in the era of inflation.
  25. Learning about various global cuisines and mastering recipes can enhance one's cooking skills.
  26. The rise of data and cloud computing necessitates cybersecurity measures to protect sensitive information.
  27. The advancements in artificial intelligence and technology are reshaping various sectors, including sports and entertainment.
  28. Politics plays a crucial role in shaping policy and legislation, especially in the context of travel, education, sports, and career development.

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