German Opposition Leader Proposes Tapping Private Savings for Infrastructure

Friedrich Merz has proposed using citizens’ savings to finance public infrastructure.

Friedrich Merz, the nominee for chancellor from the conservative Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), has suggested tapping into private savings to fund public infrastructure. Merz believes this approach could help Germany avoid further debt accumulation.

Germany’s Ministry for Economic Affairs recently predicted a 0.2% decline in GDP in 2024, a significant downward revision from the previously projected 0.3% growth. This would mark the second consecutive year of recession for the EU’s economic powerhouse.

Germany’s industrial sector has been facing challenges in recent years due to factors such as weak demand in key export markets, a shortage of skilled workers, and the negative impact of losing access to inexpensive Russian gas.

During a party convention in Augsburg last Saturday, Merz criticized the current ‘traffic-light’ coalition government for accumulating substantial debt.

Merz argued that Berlin should not solely rely on “looking only at the public coffers” and considering the “debt brake” when it comes to reviving the economy. He believes that private capital should also be mobilized for this purpose.

Merz proposed that the government could potentially “mobilize” 10% of the €2.8 billion held in private accounts “at a reasonable rate” and direct this money toward public infrastructure projects.

It’s not that we lack capital – what we lack are reasonable tools to mobilize this capital in such a way that it benefits the common good of our country,” Merz stated. He asserted that this approach, which “other countries have shown that it works,” could be effective for Germany as well, allowing it to avoid taking on more debt. However, Merz did not elaborate on the specific mechanisms involved in implementing this proposal.

Merz also emphasized the need to strengthen Germany’s military capabilities while advocating for continued support for Ukraine.

Germany is the second-largest contributor of defense aid to Ukraine, having provided over €10 billion ($11.19 billion) in equipment and weaponry between January 2022 and June 2024, according to the Kiel Institute for the World Economy. Additionally, Berlin has also provided Kiev with nearly $5 billion in humanitarian and financial assistance over the same period, the think tank estimates.

Chancellor Olaf Scholz has acknowledged that many Germans are unhappy with the ongoing aid to Ukraine.

Opposition parties, including the right-wing Alternative for Germany (AfD) and the left-wing Sahra Wagenknecht Alliance, have repeatedly condemned German weapons deliveries to the conflict zone, as well as the economic sanctions against Russia. They argue that the current government’s policies are harming the German economy and could potentially escalate into an all-out war between NATO and Russia.