Germany’s leadership to vote on $59 billion climate fund as economy struggles
Germany’s leadership will vote on a $59 billion climate change package in a cabinet meeting today.
The package features spending measures and tax subsidies—including carbon pricing on transport and energy use, incentives to buy electric cars and higher duties on domestic flights—to be enacted from 2020 to 2023.
While the plan focuses on cutting emissions to 40% of 1999 levels by 2030, environmental groups have described the measures as “slow, feeble and non-binding”.
Clocking negative growth last quarter, Europe’s largest economy is now just one quarter away from recession—a scenario economists at Credit Suisse expect when economic data is released on November 22.
Tax subsidies on electric cars and a decrease in value-added taxes on train tickets from 19% to 7% are aimed to promote carbon neutral transport infrastructure. These measures are likely to succeed in boosting private consumption while adopting green policies.
However, Germany’s current economic woes lie in the slump in its export-oriented manufacturing sector; external factors, such as the US-China trade war, are largely to blame for this stagnation. The climate change package can thus affect long-term behavioural change in market demand, but cannot be expected to compensate for the downturn in manufacturing output in the coming year.
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