A red-green-red government after the general election would be the result that German companies fear most. Ifo President Clemens Fuest is convinced of this, he told Bloomberg-TV in an interview.
A coalition of the SPD, the Greens and the Left could trigger international uncertainty about German foreign policy, increase the tax burden and lead to an interventionist climate policy, said Fuest in the interview on Friday.
The Ifo business climate indicator marked a 5-month low today, burdened by persistent supply bottlenecks that held back production in the manufacturing sector in Germany.
“One issue is important, and that is whether we have a left majority, a majority of Social Democrats, Greens and the extreme left. That would likely lead to a left-wing coalition, in which case there would be a marked shift to the left, which is of concern to the economy. If there is no such majority, the formation of a government could take time, but no matter which government comes out of it, if it is a moderate government, then there will not be any great volatility in economic policy, that is, the result does not play such a role major role. The real difference is between a left coalition including the extreme left and the rest, ”said Ifo President Clemens Fuest.
Neither the SPD nor the Greens have so far explicitly ruled out a partnership with the left. According to an analysis by Bloomberg Economics, a left alliance would lead to higher tax revenues as everyone plans to raise taxes on high-income households and large fortunes. At the same time, spending would also increase significantly – and the debt brake would probably be history.
The introduction of a wealth tax would “put a considerable strain on investments in Germany and lead to capital outflows,” said Fuest. “It’s not clear that it would come, but there are tax concerns.” (kb)
