Angela Merkel

Flack from the Back Bench

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Many members of a pro-Christian Democrats business association are "less satisfied" or "not at all satisfied" with Chancellor Angela Merkel's policies in four areas.
  • Why it matters

    Why it matters

    Sharp criticism from a leading business association could convince Chancellor Angela Merkel to push through more pro-business policies.

  • Facts

    Facts

    • The Economic Council is a business association, with links to the CDU, representing the interests of more than 11,000 German businesses.
    • Michael Bahlsen, the council’s new president, told Handelsblatt that he saw “real shortcomings” in the government’s economic policy.
    • Chancellor Angela Merkel’s CDU governs with the Social Democrats, which has pushed through pro-labor reforms, including a minimum wage and early retirement.
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    Audio

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German business leaders lined up on Tuesday to criticize Chancellor Angela Merkel’s coalition government, saying it was putting Germany’s future at risk by shunning reforms and doling out benefits.

Michael Bahlsen, the new president of the Economic Council, a business lobby with ties to Ms. Merkel’s Christian Democrats, said the coalition had damaged the power sector with its energy reforms, was too prone to short-term thinking and had made a mistake by lowering the retirement age.

“I see real shortcomings, especially as we have to lay the foundations today for what our children will one day have to manage,” Mr. Bahlsen, 66, the owner and chief executive of the Bahlsen biscuit empire, told Handelsblatt in an interview.

“The government is interfering too much and thinking too short term, sometimes only until the next election.”

Michael Bahlsen, President of Economic Council business association

“Take a look at the pension reform of Labor Minister Andrea Nahles — there won’t be much left for the next generation.”

The pension reform which came into force in 2014 allows people to take early retirement at 63 with a full state pension if they have been working for 45 years or more. It was one of the key demands of the center-left Social Democrats to form the grand coalition with Ms. Merkel’s conservatives after the last general election in 2013.

The government has also increased pensions for mothers whose children were born before 1992, introduced a minimum wage and generally refrained from economic reforms. Ms. Merkel won her third term in 2013 not just due to her soaring personal approval ratings in Germany but also because she had pledged billions of euros in benefit increases.

The measures have proved predictably popular and the government can afford them for now as its coffers are brimming with tax revenues after years of consistent economic growth.

 

Not So Happy-01

 

But business leaders warn that Europe’s largest economy is storing up trouble for itself with handouts that will place a heavy burden on taxpayers in the future, especially as Germany’s population ages.

“The government is interfering too much and thinking too short term, sometimes only until the next election,” said Mr. Bahlsen, who was elected as the council’s president on Tuesday. “Unfortunately the priority often isn’t to find the right way but just getting re-elected.”

He was particularly critical of Ms. Merkel’s renewable energy reform drive which is aimed at shutting down all nuclear power plants by 2022 and weaning the country off fossil fuels by 2050. The energy transition has plunged big power companies into disarray by making many of their plants unprofitable.

“The uncertainty in energy policy is causing many people problems. I’m not even referring to the destroyed business model of the big utilities. There’s simply not enough clarity about where the country is heading. There’s a lack of dependability,” Mr. Bahlsen said.

Ms. Merkel, fresh from presiding over a grand pledge for a carbon-free world by the end of the century at the G7 summit in Bavaria on Monday, was among the 2,700 attendees at the Economic Council’s annual conference in Berlin.

Praise for her economic policies was in short supply. Biscuit maker Mr. Bahlsen quipped that newspapers would soon be dubbing him the “cookie monster,” intent on annoying the government.

The majority of corporate executives is unhappy. A survey of the the 11,000 managers and entrepreneurs that belong to the Economic Council found that 72 percent of them were only marginally satisfied or outright dissatisfied with the government and more than 75 percent were dissatisfied in particular with its energy, pension, transport and infrastructure policy.

It’s evident that many of them hanker after the pro-business Free Democratic Party that was Ms. Merkel’s junior coalition partner in her second term, but failed to make it into parliament at the last election.

According to the survey, 78 percent of Economic Council members missed the party as a corrective pro-market element in parliament.

 

Pro-business Party FDP-01

 

“This is the heyday of dirigisme,” Carsten Linnemann of the CDU, who heads an association representing small and medium-sized businesses, said on the sidelines of the meeting. “This will only really take its toll when times get tougher again.”

Peter Blauwhoff, the head of Shell Germany, said the government should create “dependable conditions” in climate policy for example by backing global carbon trading. Instead, delegates complained, it had pandered to trade unions, consumer lobbies and environmental groups.

Rainer Haseloff, the CDU governor of the state of Saxony-Anhalt, was dismissive about the G7’s carbon-free climate goal by 2100. “Life will teach us otherwise,” he said. Many delegates share that sentiment.

Michael Fuchs, deputy parliamentary group leader of the CDU, told Handelsblatt: “I’m fighting for a consistent economic policy.”

Mr. Fuchs said there was a big backlog of necessary reforms but added that it was hard to push them through when the economy was doing as well as it is now.

The coalition plans to at least to agree a law to cut red tape this week. Dubbed “One In, One Out,” it states that for every new bureaucratic rule, an old one has to be abolished.

But the business lobby is not impressed. “That alone can’t be it,” said a number of delegates. Besides, new laws to be implemented as part of the coalition agreement between the conservatives and Social Democrats are exempt from it. For example, Labor Minister Andrea Nahles wants new regulations for temporary employment — another red rag to Germany’s disappointed business leaders.

 

Political Rivalry-01 (6)

 

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. Thomas Tuma is an associate editor in chief at Handelsblatt. Martin-Werner Buchenau, Dana Heide, Jan Hildebrand and Frank Specht also contributed reporting to this article. To contact the authors: delhaes@handelsblatt.com and tuma@handelsblatt.com

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