By Maria Martinez

BERLIN (Reuters) – New German Finance Minister Joerg Kukies stated on Tuesday that there will be no budget freeze for 2023 due to the collapse of the country’s three-way coalition.

Kukies expressed confidence that the government could manage the year without issues during his address at the Sueddeutsche newspaper economic summit in Berlin.

The opposition, including the Christian Democrats (CDU) and the Free Democrats (FDP), is resisting the government's supplementary budget for 2024, which was to be voted on Wednesday.

In his inaugural address as finance minister, Kukies noted, "Whether there will be a supplementary budget in 2024 or whether we really need one is not yet clear,” addressing many concerns arising from the coalition's disintegration.

The coalition's split occurred at a critical moment for Europe’s largest economy, coinciding with Donald Trump’s win in the U.S. presidential election, which raises fears of a trade conflict with Germany’s primary trading partner and increased economic uncertainty ahead.

Kukies announced that funds no longer required to support Intel’s new chip-making facilities could help remedy this year’s budget shortages. He acknowledged Economy Minister Robert Habeck from the Green Party for his concession.

For 2024, Kukies indicated there would be a provisional budget as it is improbable that the Bundestag would approve one prior to the new elections on February 23.

"The world will not come to an end," he remarked, clarifying that while this is a common practice, it may lead to delays or the cancellation of certain projects.

Kukies affirmed that the federal government is committed to meeting all of its financial obligations.

PRIVATISATION PROGRAMME

The finance minister reiterated the government's commitment to its focus on "privatisation after stabilisation," specifically highlighting the plans for re-privatising the energy company Uniper, rescued amid the energy crisis following Russia’s invasion of Ukraine in 2022.

Kukies criticized the potential takeover of Commerzbank by Italian bank UniCredit, stating, "Taking an aggressive stake in a systematically relevant bank such as Commerzbank, using unfriendly methods and without co-operation, is not an appropriate approach… Hostile takeovers are not what we need for stable banks in Europe and in Germany."

He mentioned that a strategy regarding power plants would be put on hold as it wouldn’t pass through parliament before the election, but left an opportunity for the next government.

"It is essential to promote the ramp-up of the hydrogen economy, decarbonize our electricity production, and ensure reliability," he stated.

Kukies further discussed Germany’s structural economic challenges like bureaucracy and stressed that the government would work to pass initiatives highlighted in the previous administration’s growth strategy.

Germany, the world's third-largest economy, has underperformed compared to the European Union average since 2021 and is anticipated to contract for the second consecutive year in 2024, making it the poorest performer among the Group of Seven major economies.

The growth initiative encompasses 49 measures, with some projected for parliamentary approval before the year's end. The coalition collapse has thus postponed several plans, potentially leading to greater economic challenges ahead.

Kukies concluded by asserting the government will focus on advancing laws already well progressed and achieving the necessary consensus for approval before the election.