These additional requests have complicated matters. While some SPD
grandees have requested substantial corrections, CDU and CSU
representatives have rejected modifications of the basic agreement altogether.
However, options for a compromise emerged soon.
A case in point was the CDU/CSU’s increased willingness to accommodate requests important to SPD
members, e.g. Enhanced benefits from the statutory health insurance scheme
(reduced appointment waiting times for scheme members). On the other hand,
the SPD no longer insisted on major corrections of the original compromise on
asylum policy which provided for a limit of refugee immigration (max. 220,000
per year) and restrictive rules for family reunification (max. 1,000 per month plus
hardship cases). When the media reported last Tuesday that the SPD has
widely accepted this key CSU project, it was clear that the negotiators had
achieved a breakthrough.
So far, little detail is known beyond the principal points stipulated in the
exploratory talks and the outline of the compromises on the SPD’s additional
requests. Notwithstanding these modifications and (possibly) further
clarifications, especially with regard to European policy issues, the final treaty
will most likely primarily reflect the political projects and priorities already known.
This means a forthcoming Groko is likely to widely use the current fiscal
headroom to finance a further rise of social expenditures, to promote
infrastructure investment (esp. On digitalisation, education and transportation)
and to provide tax relief for low- and middle-income earners. We expect that
these measures will over time lead to a gradual decline in the (general
government) fiscal surplus.