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We need 'massive investment' in Germany, aspiring SPD leader says

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By Reuters
We need 'massive investment' in Germany, aspiring SPD leader says
FILE PHOTO: Norbert-Walter Borjans, Finance Minister of Germany's North Rhine-Westphalia state, during a Reuters interview in Duesseldorf, May 16, 2013. REUTERS/Ina Fassbender/File Photo   -   Copyright  Ina Fassbender(Reuters)

By Paul Carrel

BERLIN (Reuters) – Germany needs massive investments in infrastructure and the government should be prepared to make them even if it means running a budget deficit, aspiring Social Democrat (SPD) leader Norbert Walter-Borjans said on Tuesday.

Germany’s oldest party, divided over staying in conservative Chancellor Angela Merkel’s coalition, is holding a protracted leadership race after its worst ever performance in elections to the European Parliament in May forced Andrea Nahles to quit.

Just off all time lows, the SPD is languishing in polls at around 15%, way below Merkel’s conservatives and the Greens. The remaining two pairs of leadership candidates sparred at a debate on Tuesday over how to boost the party’s fortunes.

“We know the economy is cooling down. We need massive investments,” Walter-Borjans said, ahead of the vote by 426,000 party members between Nov. 19 and 29 on who should lead them.

Boosting German investment would be positive for the broader euro zone. The new president of the European Central Bank, Christine Lagarde, has singled out Germany as a country that could deploy its budget surpluses to help growth in the bloc.

Walter-Borjans, a former finance minister in the state of North Rhine-Westphalia who is best known for pursuing tax evaders with Swiss bank accounts, is running for the leadership on a tandem ticket with left-winger Saskia Esken.

They are up against incumbent Finance Minister Olaf Scholz, who is unpopular with the SPD’s left for sticking to strict fiscal rules introduced by his conservative predecessor, and his little known running mate Klara Geywitz.

Walter-Borjans said the German government need to go beyond a package of investments it has just agreed on climate protection. “We need 240 billion for schools, roads, railway lines. We need 100 billion for digitalisation,” he said.

Turning to Scholz, he added: “And you, Olaf, must also say: These are investments that, should there be any doubt, must still be made when they can’t be paid for with a balanced budget.”

Scholz, who has said Germany intends to stick to its balanced budget rules for now and boost spending without incurring new debt, shot back: “The SPD will only have a chance at elections if we act sensibly as a party.”

Traditionally a nation savers, Germans are generally wary of the government taking on debt, especially as the ageing population will have fewer workers to pay it back in future.

The SPD leader will be officially decided by delegates at a conference in December, when the party will decide whether or not to stay in the ruling coalition.

(Writing by Paul Carrel; Editing by Alistair Bell)