German Finance Minister Predicts Demise of Budget Austerity

German Finance Minister Olaf Scholz predicted that austerity will lose out to more expansive budget policies in coming years, further distancing himself from Chancellor Angela Merkel’s conservatives ahead of September’s general election.

“The decision is really between austerity or continuing to make sure that the necessary investments are made and there is adequate financing for the welfare state,” Scholz, who is running for the Social Democrats as their chancellor candidate to replace Merkel, said Wednesday during an online discussion. “My prediction is: austerity will lose.”

Scholz has repeatedly hailed the budget discipline that he says put Germany’s finances in a solid position to cope with the impact of the coronavirus on Europe’s biggest economy.

However, as the election approaches, he is increasingly seeking to distance himself from the commitment to strive for balanced budgets held dear by Merkel’s CDU/CSU bloc. His bid for the chancellery is a long shot, as support for the SPD has collapsed since the most recent election in 2017 and he is relatively unpopular among voters.

Scholz last month unveiled the party’s fiscally expansive program to finance a sweeping shift to cleaner energy and better digital infrastructure.

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