New German government plans 60-bn-euro 'future' fund

Germany's new government is planning to earmark 60 billion euros ($68 billion) to fund "future investment" including its plans to tackle climate change, Finance Minister Christian Lindner said on Friday.

The money will be taken from funds approved to help the government tackle the coronavirus pandemic but which "have not been used", said Lindner in his first major announcement since taking office on Wednesday.

The government had signed off a plan to borrow 240 billion euros in 2021 to finance measures to lessen the impact of the pandemic on businesses but will now only need 180 billion euros.

Germany's coalition government of the Social Democrats (SPD), Greens and liberal FDP has announced ambitious plans to tackle climate change, including ending coal power and generating 80 percent of electricity from renewables by 2030.

With an eye on the powerful automotive industry, the parties have also resolved to put 15 million fully electric cars on the road by 2030, up from just over 500,000 currently.

Lindner said the new funds would also be used to invest in the "digitalisation" of the German economy.

The plans will be presented to the cabinet on Monday, he said.

- Debt brake -

With the new government pledging not to raise taxes or take on new debt, many have questioned how it intends to pay for investments in modernising the country and tackling climate change.

During the three-way coalition negotiations, the centre-left SPD and the Greens had initially proposed more flexibility on fiscal policy.

But Lindner's pro-business FDP succeeded in pushing for a tougher stance on public finances.

The coalition has promised a return to the so-called debt brake -- a rule enshrined in the constitution that normally limits Germany's public deficit to 0.35 percent of overall annual economic output -- by 2023.

The debt brake was lifted to help fight the coronavirus pandemic.

"Only by ensuring stable finances can we meet the requirement of fairness between the generations," Lindner said on Friday.

The reallocation of funds has drawn criticism from the opposition, with some questioning whether the move is compatible with the German constitution.

Christian Haase of the conservative CDU said the move was "questionable under budgetary law... It remains to be seen whether it will stand up to legal scrutiny."

But a source at the finance ministry said the former conservative-led government had done the same thing with its 130-billion-euro recovery fund launched in June 2020, after the first wave of the coronavirus.

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