Deutsche Bank German Policy Watch: The CDU/CSU election manifesto - Something for everyone

24 June 2013

The CDU's election manifesto is a potpourri reflecting the CDU's self-image as a broad-church party. It promises lower income taxes for the middle class and extended social spending, while also stressing its willingness not to increase the financial burden for businesses.

The manifesto begins with a clear commitment to Europe and the euro. The respective proposals are well-known: strict conditionality for the support of partner countries, rejection of eurobonds and a transfer union, support for a banking union, e.g. ECB supervision, but only for large, systemically important banks, no common European banking deposit guarantee scheme, and introduction of an FTT.

The agenda for fiscal policy is ambitious. Proposed tax cuts and extended public spending could amount to an estimated €21 billion per year. Increased spending on education and infrastructure will add more. But most spending promises are made under the reservation that public coffers will be sufficiently filled without considering additional tax hikes. Also, the CDU advocates a balanced budget and a reduction of the debt ratio to below 60 per cent of GDP. In contrast to 2009, this year’s manifesto does not name the FDP as the favoured partner for a coalition government but leaves all relevant options open. 

Among the bunch of issues addressed in the manifesto in more detail European policy ranks first. The CDU states that Germany and its partners have been able to secure the coherence of the eurozone and to implement important reforms for lasting stability and strongly advocates continuing with this policy.

To enhance trust in the euro’s stability the CDU identifies three major fields for action:

• Banking union: Here, like in the other fields, the manifesto repeats the CDU’s well known pledges: A banking union, e.g. ECB supervision, shall be established for large, systemically important banks while leaving out the savings and cooperative banks in Germany. A common European banking deposit guarantee scheme is rejected.
• Compliance with strict budget rules: Governments have to stick to the rules of the stability and growth pact and the fiscal compact. Failures to miss established thresholds shall be sanctioned. Implementation of a debt restructuring mechanism for sovereigns that are not able to cope with their debt should be considered.
• Enhancement of competitiveness: The individual Member States and the European Commission shall agree on a pact for competitiveness. Germany shall support partner countries in implementing a system of dual training in schools and on the job to contribute to the reduction of youth unemployment.

The CDU hopes that ongoing economic growth will provide the government and the pension scheme with revenues high enough to finance all proposed measures. Despite these promises, the manifesto still shows a clear commitment to a stability-orientated, sustainable fiscal policy. The CDU intends to present a balanced budget without new debt in the imminent legislature period. 

According to a recent Allensbach poll, the CDU’s agenda apparently meets the population’s preferences. For 81 per cent of those surveyed the priorities for the new government should be to reduce the increase in energy prices, to secure pensions (81 per cent) and to contain Germany’s burden in the context of the euro rescue measures (76 per cent). Only a minority (40 per cent) favours the SPD’s and the Greens’ approach for a higher top rate for the income tax.

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