Germany prefers to use chip billions for road construction
"Everything that is ready to be built will be built," says German Chancellor Merz. He is referring less to chip factories and more to roads and railways.
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Germany's federal government plans to spend an additional three billion euros on new road construction on top of previous plans. This was agreed upon by the leaders of the coalition parties in the coalition committee. In two years' time, the coalition wants to see whether this is enough or whether more money is needed. "We will exhaust all financing options to realize this," says Federal Chancellor Friedrich Merz (CDU). This includes reducing the German chip subsidies. Originally, 20 billion euros were earmarked for this between 2025 and 2027.
The government will also be giving a further three billion euros to those citizens with low and medium incomes who can afford an electric car. For taxpayers of retirement age, a tax reduction will come into force at the turn of the year. They will then be able to earn up to 2,000 euros a month tax-free. Conversely, social benefits will be more difficult to obtain: The citizen's permission system is to be remodelled into a "new basic income support for jobseekers" – with stricter conditions than at present. Anyone who does not fulfill the conditions "must expect to face stricter sanctions," according to the federal government.
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"We decided all of this yesterday in a really good atmosphere," said Merz on Thursday, "I would like to thank my colleagues for the really, really good cooperation." With the reallocation of funds from chip funding to the federal budget, the government is taking up parallel proposals by Christian Lindner (FDP) and Robert Habeck (Greens) from the previous year. At that time, Lindner was Finance Minister and Habeck was Economics Minister. The background to this is that Intel has abandoned the construction of its chip factory in Magdeburg, for which subsidies totalling almost ten billion euros were planned.
However, the ZVEI, the German Electrical and Electronic Manufacturers' Association, is not giving the government any roses. Its Managing Director Sarah Bäumchen recognizes the reallocation of funds earmarked for semiconductor projects as "a fatal signal not only for the economic future viability, but also for our country's strategic ability to act. Even with the funding provided to date, we would lose market share – while other regions of the world are massively expanding their subsidies and creating much more attractive framework conditions." Microelectronics "determines the resilience of critical infrastructures, the operational capability of modern defense systems, and the competitiveness of entire economies," says Bäumchen, explaining the strategic importance of her industry.
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