IMF report recommends 'debt brake' reform ++ Rheinmetall launches PR offensive with BVB deal
Wednesday 29th May
Good morning.
Today the press is reacting to the release of the IMF’s annual report on the state of the German economy, and the news that arms manufacturer Rheinmetall has signed a sponsorship deal with Borussia Dortmund worth millions.
Lindner vs the IMF
After launching all-out war with his coalition partners, it looks like FDP leader and Finance Minister Christian Lindner has an unlikely new opponent in his crusade to bring austerity back to the German budget: the International Monetary Fund.
The Washington-based economic and financial organisation yesterday published its annual report on the German economy (see here, in English), agreeing with Lindner’s opponents in government by recommending a relaxation of the tight rules around federal borrowing (known as the ‘debt brake’) to enable room for ‘much-needed public investment and other key priorities’ (points 7 and 8 in the report).
BILD summarises the report into four key recommendations, claiming ‘these steps will get our economy running smoothly again’:
Debt brake reform: raising the limit on net borrowing by 1% annually
Pension reform, including tying pension age to life expectancy (which also contradicts Scholz’s recent promises to leave the state pension age at 63)
Tax increases: a rise in tax on real estate, goods and services (which are currently below average for advanced economies), and closing tax loopholes.
More women in the workplace: greater focus on childcare provision
See also these largely approving reactions from the FAZ and the Süddeutsche.
COMMENT: My impression is that this is being received as a welcome intervention in the impasse that Lindner has caused over the past few months. Though this is bad news for Scholz too, having backed Lindner publicly on refusing departmental spending increases. Given this, and the IMF’s awkward recommendations on pension reform, I imagine it won’t receive any senior govt recognition.
Rheinmetall on manoeuvres with Borussia Dortmund
Handelsblatt reports on the news that Borussia Dortmund has signed a deal with Rheinmetall, Germany’s leading arms manufacturer, to sponsor the team for the next three seasons. This will be the first time a defence company has sponsored a Bundesliga team. According to the trade paper’s article, there’s an interesting motive to the deal from the club’s point of view (besides the millions of euros the deal is worth):
‘The Bundesliga club does not want to enter into the collaboration with Rheinmetall purely for the money. According to sources at the club, it is also interested in sparking a public debate about what is necessary for the country's security.’
Apparently the deal with only involve displaying the arms manufacturer’s branding on billboards around the pitch, rather than a kit sponsorship (which would put the logo on the famous black-and-yellow jersey).