Infrastructure investment high on the agenda. The coalition will spend about
EUR 18 bn on education and digitalisation over the next term. The bulk of
the funds to finance this initiative (EUR 12 bn) shall be generated from
revenues from the allocation of UMTS and 5G licenses. In addition
government funds in the total amount of EUR 16 bn are earmarked for
investments in housing construction, transportation and refugee integration.
Additional pension benefits could amount to about EUR 3.5 bn p.a. Initially,
but the costs will be much higher in the medium and longer term.
Disconnect between fiscal and economic policy. Higher investment in
education and (digital) infrastructure is a precondition to master the
structural challenges ahead. But ever more regulation in the labour market
(but also in housing) will likely severely curtail productivity gains.
Biased tax policy. Despite surging tax revenues, general tax cuts amount to
about EUR 18 bn only, and fail to provide relief across the board. While
families as well as low- and middle-income earners will benefit substantially,
(single) higher-income earners and, in principle, corporate Germany, too,
are left out in the cold.