German Chancellor confident about economy, refuses to spend more budget support

In an interview with the newspaper Mediengruppe Bayern on August 26, the German leader said that Europe's largest economy possesses the best prerequisites to ensure its technological leadership for decades to come.

Chancellor Scholz said Germany had good economic prospects, despite the current weak situation.

Recently, the German Ministry of Economy announced that it is preparing aid worth about 22 billion USD to support the development of domestic semiconductor production in the coming years using money from the extra-budgetary Climate and Change Fund.

Mr Scholz's comments came a day after business outlook data showed Germany suffered another blow in August, despite the economy exiting recession in the second quarter.

Germany, which has been Europe’s engine of trade growth for decades, has raised concerns that a prolonged period of weakness could be coming. It is the only major country where output is forecast to fall this year.

Chancellor Scholz argued that Germany was bearing the brunt of a weakening global economy due to its dependence on exports.

The German chancellor also rejected criticism that Europe’s biggest economy’s problems were exacerbated by his government’s refusal to boost spending, pointing out that Germany had taken on hundreds of billions of euros in debt in recent years to weather the Covid-19 pandemic, as well as to cushion the blow from the conflict in Ukraine and soaring energy prices.

He also rejected calls from some lawmakers to subsidize electricity prices for large businesses. “Not only do we lack the money to subsidize electricity prices in the long term, we also lack legal options,” Mr. Scholz said.